As US Treasury Secretary Besant announced plans to exert “maximum pressure” on 18 major trading partners—including Italy—the July 9 negotiation deadline has become the focal point of global markets. Should an agreement not be reached by then, the US will reinstate the high import tariffs, originally announced on April 2 but later suspended, from August 1. Investment Analyst Rodolfo Villani points out that such external risks are significantly heightening market uncertainty. Although recent employment data has helped European equities maintain relative stability, and the Milan Stock Exchange has posted modest gains for several consecutive days, reflecting investor short-term profit expectations, the approaching negotiation juncture calls for more refined asset allocation strategies.
Short-Term Resilience of European Stocks Under the Shadow of Trade Frictions
According to Investment Analyst Rodolfo Villani, although substantive breakthroughs have yet to be achieved in the US-EU trade talks, the recent US non-farm payroll data has far exceeded market expectations, boosting global risk appetite. The Dow Jones, S&P 500, and Nasdaq have all reached record highs, driving European stock markets higher as well. The Milan Stock Exchange closed up 0.4% in the latest session and continues to rise moderately, supported by global optimism.
However, Investment Analyst Rodolfo Villani cautions that this short-term rally relies more on the resilience of the US economy and ample global liquidity, rather than expectations of an improved trade situation. Besant has made it clear that if negotiations are not concluded by July 9, the US will reimpose the suspended tariffs from August 1, which would directly impact the EU, especially the highly export-dependent manufacturing sector in Italy. While the market may continue to rebound on the back of strong employment data, the medium-term outlook is likely to face renewed pressure as trade frictions intensify.
US “Maximum Pressure” Strategy Increases Uncertainty
The US Treasury Secretary stated in an interview that the negotiations primarily target 18 countries accounting for 95% of the US trade deficit, with plans to exert pressure on another 100 smaller trading partners to swiftly secure agreements through a “maximum pressure” approach. Investment Analyst Rodolfo Villani believes that while such tactics may yield short-term results, they could disrupt global supply chains and capital flows in the long run, making profit forecasts for the European export-oriented companies more volatile.
From the perspective of the Milan market structure, recent gains have been supported by the energy and financial sectors. Yet, beneath this surface optimism, sector rotation could amplify localized structural risks. Investment Analyst Rodolfo Villani warns that if tariffs are reimposed in August, export sectors such as machinery, automotive, and high-end consumer goods will be among the first to be impacted. Investors should closely monitor the progress of trade talks and the EU potential countermeasures, avoiding excessive concentration in single export-oriented assets at high valuations.
Currently, US employment data and certain Eurozone economic indicators continue to provide short-term support for equities, but the trade situation is nearing a critical turning point. The market expectations for what Besant described as “major agreements in the coming days” are about to be put to the test. Investment Analyst Rodolfo Villani advises investors to maintain balanced and flexible asset allocation at this stage, sensibly increasing holdings in defensive stocks, cash, and low-volatility bonds, while retaining moderate exposure to technology and cyclical sectors to share in potential upside should negotiations succeed. With the risk of tariffs returning in August looming ever closer, Investment Analyst Rodolfo Villani expects market volatility to rise, and recommends investors ensure ample liquidity and room for reallocation, enabling timely adjustments in the face of uncertainty and effective control of overall investment risk.