Trade Likely to Remain in the Spotlight Despite Quiet Week of Major Economic Reports
August 4, 2025
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Last Wednesday, the Federal Reserve (Fed) ended its July Federal Open Market Committee meeting by keeping the federal funds rate steady at 4.25% to 4.5% for the fifth consecutive meeting, as officials weighed ongoing uncertainty around the economic effects of recently enacted tariffs.1 During the press conference, Fed Chair Jerome Powell noted that while growth has moderated and inflation remains above target, the full impact of tariffs on prices could take time to become clear. Although two Fed governors dissented — advocating for an immediate rate cut — Powell signaled that no decisions were made regarding a September rate move.2 However, markets are increasingly pricing in rate cuts later this year in response to persistent inflation and signs of a cooling economy.
Regarding trade policy, the Trump administration reaffirmed its tariffs before the Aug. 1 deadline but delayed implementing most reciprocal measures until Aug. 7. In advance, the White House forged limited trade agreements with a handful of allies, including the United Kingdom, European Union, Japan and South Korea. These deals came with new tariffs — typically around 15% for European and Korean goods — while some trade partners, such as Mexico, received additional time to negotiate.3 Most partners, however, faced sharply higher tariffs ranging from 10% to 41%, with only select items exempted.4 As a result, the average U.S. tariff rate has jumped from a historical level of 2.5% to 22%, raising concerns about negative impacts on consumer prices and overall consumption.5
Labor market data contributed to market unease. The latest nonfarm payrolls report showed only 73,000 new jobs last month, well under the expected 100,000, with previous months’ figures revised lower.6 The unemployment rate rose from 4.1% to 4.2%, reflecting a notable slowdown in hiring momentum.7 While the Fed maintains that the labor market remains relatively robust, officials continue to closely track the rise in unemployment for signs of further weakness.
This week holds few major U.S. economic reports and Fed speeches, but several June indicators — including factory orders, U.S. trade deficit, consumer credit and the New York Fed’s Survey of Consumer Expectations — will be released.8,9 Markets also expect second-quarter figures on nonfarm productivity and unit labor costs.10 Atlanta Fed President Raphael Bostic will speak on Thursday.11
Sources:
1CNN – Fed keeps interest rates unchanged for fifth-straight time; 7/30/25
2CBS News – Federal Reserve holds its benchmark rate steady at today's FOMC meeting; 8/1/25
3CBS News – Trump unveils higher tariffs on dozens of countries; 8/1/25
4Forbes – Trump Announces New Global Tariff Rates—As He Pushes Back Start Date Again; 8/1/25
5World Scorecard – US Tariffs and The World — Tariff Rates by Country (July 2025); 8/1/25
6,7CNBC – U.S. added just 73,000 jobs in July and numbers for prior months were revised much lower; 8/1/25
8,10,11MarketWatch – U.S. Economic Calendar; as of 8/4/25
9Federal Reserve Bank of New York – Center for Microeconomic Data; as of 8/4/25
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