CITIC Securities: It is difficult to return to extreme tariff reciprocity, TACO trading model continues.

CITIC Securities research report pointed out that on July 7 local time, Trump effectively extended the previously set deadline of July 9 for the exemption of reciprocal tariffs. Regarding the future direction, the tariffs set in this Trump letter may not be the final result. It is expected that countries will continue to advance trade negotiations with the United States in July, and if an agreement is reached, tariffs may be further reduced. Regarding the tariff strategy, the 10% benchmark reciprocal tariffs are mainly for fiscal revenue considerations, and the 232 industry tariffs serve the demand for manufacturing industry reshoring. Negotiations for these two types of tariffs are more challenging, while reciprocal tariffs beyond this scope are more used as negotiation chips. Regarding the China-US relationship, in the short term, the China-US game may not be the focus of Trump's attention. It is expected that the China-US relationship will continue to be in a phase of stability, and attention can also be paid to the possibility of Trump visiting China to promote regional transactions. Regarding the US economy, it is expected that the impact of tariffs on US inflation will start in the middle of the year, last longer, and peak slower. The pressure on US economic growth caused by tariffs will be more quickly evident. In terms of major asset classes, in the short term, it is expected that the US bond yield curve will steepen, uncertainty about tariffs will decrease, and this will marginally have a negative impact on gold prices and a positive impact on the US dollar index. The strong momentum and risk appetite in the US stock market after reaching new highs may continue. Regarding China's exports, as export shipments gradually cool down, the pressure on the export chain in the second half of this year may marginally increase. In the future, China's transit trade through ASEAN and other regions may also face greater difficulties. However, in the medium to long term, Chinese companies going abroad are expected to form a new cycle of local production and consumption.