U.S. announces 35% tariff on Canadian imports and threatens tariffs on Europe, causing global market turmoil and boosting the dollar.
The announcement of heavy tariffs by the U.S. President on Canada, along with threats of broader tariffs against the European Union, triggered declines in Wall Street futures and European markets, while the U.S. dollar strengthened against the euro and Canadian dollar. These developments have sparked new volatility in global markets, particularly in the metals sector.
Trump’s New Tariffs and Market Impact
On Friday, U.S. and European stock futures in Asia reacted negatively to newly announced tariffs by U.S. President Donald Trump. Trump declared a 35% tariff on all Canadian imports effective August 1st. He also threatened tariffs ranging from 15% to 20% on other countries, including the European Union. This sudden announcement halted early gains in regional indices across Asia and Europe and heightened investor concerns over the continuation of the trade war.
Nasdaq and S&P 500 futures fell by approximately 0.4%, while EUROSTOXX 50 futures dropped 0.6%. Meanwhile, the U.S. dollar gained 0.3% against the euro, reaching $1.1668, and strengthened 0.4% versus the Canadian dollar, reaching 1.3704 CAD.
Expansion of the Trade War and 50% Tariff on Copper
This move is a continuation of the tariff policies launched earlier this year. Last week, Trump extended the tariff implementation deadline from July 9 to August 1, allowing additional time for negotiations. However, he simultaneously expanded the trade conflict by announcing a 50% tariff on copper, a critical industrial metal, potentially placing significant pressure on related sectors.
Joseph Capurso, Head of International Economics at Commonwealth Bank of Australia, commented on these developments: “Given the complexity involved, it is highly unlikely that the U.S. government will secure meaningful trade agreements before August 1. Consequently, we expect a sharp rise in tariff rates or further negotiation extensions.”
Global Market Reactions and Stock Index Performance
Despite these new tensions, Wall Street recorded modest gains overnight, pushing indices to record highs. Notably, technology giant Nvidia achieved a historic market capitalization exceeding $4 trillion, marking a new milestone.
The MSCI Asia-Pacific Index (excluding Japan) remained mostly flat on Friday, with expectations of a modest 0.2% gain for the week. Conversely, Japan’s Nikkei index, after early gains, ended the week down 0.5%.
Awaiting Quarterly Earnings and Trade War Effects
Investors are now turning their focus to the second-quarter earnings reports to better assess the potential impact of the ongoing trade war and newly imposed tariffs. JPMorgan Chase’s earnings report, scheduled for Tuesday, will effectively mark the start of this critical reporting period and serve as an important market indicator.
Bond, Oil, and Gold Market Status
In the bond market, changes were minimal as the 10-year U.S. Treasury yield held steady at 4.345%. This followed data revealing an unexpected decline in weekly jobless claims.
Oil prices recovered slightly after a 2% drop overnight. Brent crude futures rose 0.2% to $68.77 per barrel, while West Texas Intermediate crude increased 0.3% to $66.76 per barrel.
In precious metals, gold prices increased by 0.3% to $3,333 per ounce. This rise is typically interpreted as a reaction to economic and political uncertainties, which have intensified amid escalating trade tensions.
