Canadian Chill Hits Stocks on New Trump Tariffs

Published as of: July 11, 2025, 9:12 a.m. ET

(Friday market open) Wall Street's positive vibes came under threat Friday from a 35% tariff imposed on imports from Canada. Major indexes fell broadly in early trading and Treasury yields ticked up amid concerns tariffs could raise prices and weigh on growth prospects. The tariffs begin August 1 and follow President Trump's 50% tariff on Brazil announced earlier this week that might force up costs of items like coffee, orange juice, and beef.

Market participants also remain on edge about a possible tariff announcement on European Union imports possible later today and the prospect of rising prices for industrial products as the result of Trump's 50% tariff on copper imports. And nerves spiked ahead of next week's crowded schedule that includes earnings from large banks and June inflation data. 

Major indexes finished at fresh record highs yesterday despite tech losing some traction in a broad rally helped by shares of travel industry stocks after Delta Air Lines (DAL) shared a positive outlook.

1. Term premium in fixed income seen rising: Investors appeared relieved late this week by decent demand seen for a Treasury auction of 10-year notes Wednesday. The benchmark 10-year yield, which had climbed steadily over the previous week, gave back some gains Thursday to fall toward the lower end of its near-term range, which has been roughly between 4.3% and 4.5% over the last two months. But that doesn't necessarily suggest a prolonged move lower for longer-dated yields. "The trend suggests that yields for intermediate to long-term bonds likely will stay elevated even if inflation comes down," Schwab's fixed income experts said in a recent analysis. "Investors likely will demand a larger risk premium to hold long-term debt versus holding a series of short-term T-bills or notes. This risk premium, or 'term premium,' already has been rising and could continue to move higher."
    
2. Mag 7 aren't best performers, while profit margins may broadly see policy pressure: Although the market remains somewhat top-heavy, the Magnificent Seven are behind the lead pack. "Yes, there's lots of concern about hefty concentration associated with the Magnificent Seven within the S&P 500, and yes, given their size, they're large contributors to index gains," said Liz Ann Sonders, chief investment strategist at Schwab. "But they're not the best performers. In fact, no Magnificent Seven stock is in the top 10 year-to-date performers, and only three of the seven are outperforming the S&P 500." Also, an element to monitor as earnings proceed is the rate of "beats" by revenue versus earnings. Though only a handful of S&P companies have shared second quarter results to date, they tended to beat estimates more on revenue. "It's too early to state with any certainty, but what would be suggested by a continued divergence between the two is that profit margins may be coming under increasing policy-related pressure," said Schwab's Sonders and Kevin Gordon, director, senior investment strategist.
    
3. Company results could test sentiment: Stocks kept rising over the last month even as analyst earnings forecasts dropped, an interesting dichotomy. FactSet's latest earnings estimates loom today. If early earnings disappoint and the market continues to trade at what's now a historically high price-to-earnings (P/E) ratio, it could call pricing into question, especially if analysts' estimates for third and fourth quarter earnings don't climb. "For now, positive earnings growth is a support, whereas stretched valuations and growth-negative tariff policy are hindrances," Schwab's Gordon said. "There are low-quality, speculative pockets of the market that have led the advance off the early April lows, which has helped push aggregate measures of investor sentiment back into extreme optimism territory. Regardless, investors should continue to embrace diversification across and within asset classes, focusing on companies and industries with strong guidance, healthy profit margins, and less exposure to foreign inputs."

• Bitcoin (/BTC) remains on a roll as the weekend approaches. It hit new record highs above $119,000 in recent trading and was up 4% early Friday, helping shares of crypto-related stocks including Coinbase (COIN) and Strategy (MSTR). Favorable crypto policy from the Trump administration and Congress has lifted cryptocurrencies this year.
   
• Tesla (TSLA) was flat in early trading. Shares rose more than 4% Thursday as Reuters reported the company seeks approval for robotaxi service in Arizona.
   
• Nvidia (NVDA) slipped 0.5% ahead of the open after another new record high yesterday. CEO Jensen Huang met with President Trump Thursday before Huang heads to China, Bloomberg reported, but the subject of the meeting wasn't immediately known. Huang has been a vocal opponent of U.S. chip trade restrictions that prevent sales of many chips to China and which he thinks could give Chinese rivals an unfair advantage. Nvidia expects to lose about $8 billion this quarter alone in sales to China.
   
• Texas Instruments (TXN) rose nearly 1% in pre-market trading following an upgrade from TD Cowen to Buy from Hold. The analyst is more confident that semiconductor de-stocking is ending.
   
• Cleveland-Cliffs (CLF) was down 1% and Freeport-McMoran (FCX) fell 2% early Friday. Their shares rose 10% and 3%, respectively, Thursday as the materials sector continued to rally on the back of fresh U.S. tariffs on imported metals.
   
• Norwegian Cruise Line (NCLH), MGM Resorts (MGM), Expedia (EXPE), and Wynn Resorts (WYNN) were mixed early Friday after all rallied yesterday as Delta Air Lines reported solid earnings and anticipated mostly positive travel demand. One soft element in Delta's report was a 5% drop in main cabin demand, a sign that more price-sensitive travelers may be pulling back.
   
• Taiwan Semiconductor Manufacturing (TSM) shares retreated slightly despite the company reporting a nearly 39% gain in second quarter sales year over year. This isn't the official earnings report from TSM, which is due later this month, but it has positive implications for the chip sector.
   
• Levi Strauss (LEVI) rose 6.8% in pre-market trading after the company's quarterly revenue beat analysts' estimates and it raised its revenue outlook to 1% to 2% for the current fiscal year. Tariffs appear to be hurting gross margin.
   
• AMC Entertainment (AMC) rose 8% ahead of the open on an upgrade from Wedbush to Outperform from Neutral. The company could benefit from more consistent releases, Wedbush said, according to Barron's.
   
• Boeing (BA) fell 0.4% in early trading. The Wall Street Journal said India will release a preliminary report today on Air India Flight 171, which crashed June 12.
   
• The Cboe Volatility Index (VIX) popped nearly 7% to just below 17 early Friday after hitting five-month lows earlier this week. Tariff concerns and hedging ahead of next week's packed market schedule could help explain the increase.

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The 10-year Treasury note yield (TNX:CGI—candlesticks) recently traded near the convergence of its 50-day and 200-day moving averages (red and blue lines), which both are near yesterday's close just below 4.35%. After wide swings in late 2024 and early 2025, the yield has been far less volatile the last two months, which helps explain why moving averages are converging. It's also in roughly the middle of its 2025 range that bottomed below 4% in April and topped at 4.8% in January. Tariff-related inflation worries and solid Fed sentiment against a July rate cut could keep yields near current levels for a while.

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

July 14: Expected earnings from Fastenal (FAST) and FB Financial (FBK). 
July 15: July Consumer Price Index (CPI) and expected earnings from JPMorgan Chase (JPM), Citigroup (C), BlackRock (BLK), Wells Fargo (WFC), Albertsons (ACI), and J.B. Hunt Transport Services (JBHT).
July 16: July Producer Price Index (PPI) and expected earnings from ASML (ASML), Goldman Sachs (GS), Johnson & Johnson (JNJ), Morgan Stanley (MS), Alcoa (AA), and United Airlines (UAL).
July 17: June retail sales and expected earnings from Abbott Laboratories (ABT), Marsh & McLennan (MMC), PepsiCo (PEP), Taiwan Semiconductor Manufacturing (TSM), Travelers Companies (TRV), and Netflix (NFLX).
July 18: June housing starts, June building permits, July preliminary University of Michigan Consumer Sentiment, and expected earnings from 3M (MMM) and SLB (SLB).