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U.S. Equity Futures Drop as Trump Unveils 35% Tariffs on Canada

7/11/2025
U.S. equity futures fell after Trump announced a 35% tariff on Canada, causing market fluctuations despite recent records in the S&P 500 and Nasdaq. Experts warn about the sustainability of the rally amidst ongoing trade tensions.
U.S. Equity Futures Drop as Trump Unveils 35% Tariffs on Canada
Trump's 35% tariffs on Canada spark market declines in U.S. equity futures, raising concerns about the sustainability of recent stock rallies.

U.S. Equity Futures Decline Amid Tariff Announcements

U.S. equity futures experienced a downturn on Thursday evening following an announcement from President Donald Trump regarding new tariffs on Canada. Effective August 1, a significant 35% tariff will be imposed, causing futures linked to the benchmark S&P 500 to decline by 0.48%. Additionally, futures for the Nasdaq 100 fell by 0.57%, while the Dow Jones Industrial Average futures decreased by 0.45%, translating to a drop of 202 points.

This announcement comes at a time when investors have been actively investing in risk assets, which has propelled both the S&P 500 and Nasdaq Composite to achieve new closing records. In regular trading earlier in the day, the broad market S&P 500 saw an increase of 0.27%, ending at 6,280.46. Similarly, the tech-focused Nasdaq gained 0.09%, closing at 20,630.67, while the Dow advanced by 192 points, or 0.43%, to finish at 44,650.64.

Investors Remain Optimistic Despite Trade Concerns

Despite the latest trade developments, including a 50% tariff on imported copper and a similar tariff on Brazil announced the previous night, investors appeared unfazed. President Trump mentioned during an interview with NBC News' Kristen Welker that letters could be dispatched to both Canada and the European Union regarding the new tariff proposals as early as today.

The stock market rally, which began on Wednesday, was significantly influenced by Nvidia briefly reaching a $4 trillion market cap for the first time, igniting a surge in technology stocks. On Thursday, the consumer discretionary sector emerged as the top performer in the market, reflecting a strong appetite for consumer-focused stocks.

Market Outlook and Economic Resilience

However, Drew Pettit, Citi's U.S. equity strategy director, cautioned that for this rally to be sustainable, the economy must remain resilient. He expressed his concerns during an appearance on CNBC's Closing Bell Overtime, stating, "Structurally, we're not there yet. Fundamentally, I don't think we're there yet." Pettit emphasized the necessity of maintaining robust macroeconomic data and the potential for the Federal Reserve to cut interest rates.

Pettit further explained, "If you want these types of sectors to continue to outperform beyond just a tactical trade, you're going to need both the macro data to hold strong and the Fed to adapt." He believes that achieving a balance between these two factors is crucial for sustaining market momentum.

Looking Ahead: Treasury Department's Monthly Statement

As the week comes to a close, major market averages are poised to end with minimal changes. The Dow remains just below the flatline on a weekly basis, while both the S&P and Nasdaq have gained less than 1%. Investors are keenly awaiting the Treasury Department's monthly treasury statement, set to be released at 2 p.m. ET on Friday, which could provide further insights into the economic landscape.

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