“Big and Beautiful” Act Passed: Markets Focus on Reciprocal Tariff Progress with Key Trading Partner

After clearing the Senate last week, the “Big and Beautiful Act” has officially become law. With internal disputes behind him, former President Trump is now pivoting toward enforcing reciprocal tariffs with 12 major trading nations. On Sunday, Trump stated, “I believe that by July 9, most countries will have either received a letter or reached an agreement.” He hinted that notices for tariff hikes would start going out on Monday, with more expected Tuesday.

U.S. Treasury Secretary Scott Bessent added that countries receiving the letters but failing to reach deals with the U.S. would face top-tier tariff rates—some as high as 50%—starting August 1. With Trump and Bessent pushing the timeline forward, we believe more positive developments could soon follow.

(Figure 1: Big and Beautiful Act Officially Signed into Law; Source: The White House)

According to the amended version passed by the Senate on July 1, adjustments in spending caps and baseline revisions will result in the act increasing the U.S. fiscal deficit by approximately $2.9 trillion over the next decade. When interest expenses are included, the total impact rises to around $4.1 trillion.

To offset this $4.1 trillion deficit, the U.S. is expected to subsidize it with new external tariffs. Three major research institutes have released projections for tariff revenues:

• Yale Budget Lab estimates tariffs will generate $2.8 trillion in revenue from 2026 to 2035.

• Tax Foundation forecasts that a “10% Universal Tariff” from 2025 to 2034 could raise $2.2 trillion.

• Penn Wharton Budget Model projects that under Trumps current tariff framework, revenue would total about $3.2 trillion over 10 years.

Excluding interest expenses, these revenues could effectively cover the fiscal impact of the deficit increase. This rationale is likely to gain traction among investors, alongside growing recognition that the U.S. dollar remains undervalued.

Takeaway:

Besides tariffs and the Federal Reserves monetary policy, the second week of July will kick off the U.S. earnings season in full swing. Additionally, consumer spending indicators—such as Amazon Prime Day—may add volatility to the market. All in all, several catalysts could support another rally in U.S. equities and strengthen overall risk appetite.

Gold Technical Outlook

Gold broke below its previous low of $3,311/oz during the Asian session, bottoming near the 50% Fibonacci retracement level at $3,306/oz. The trend has not yet shifted bullish, and short-term momentum remains bearish.

If the recent downward wave continues to unfold, the next target is unchanged at $3,277/oz, corresponding to the 1.168 Fibonacci extension.

The bearish bias is primarily confirmed through daily candlestick patterns—consistently forming lower lows and failing to break above previous highs. For a broader trend signal, watch the weekly candle closely. If last week's bullish body is fully engulfed, it could pave the way for a deeper correction toward the neckline area around $3,120/oz.

• Support levels: $3,311 / $3,277

• Resistance level: $3,332

Risk Disclaimer:

The above views, analysis, research, and price projections are intended for general market commentary only and do not represent the stance of this platform. Readers assume full responsibility for their investment decisions. Trade cautiously.