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Stocks slumped in morning trading on Wall Street while U.S. Treasury yields fell sharply Friday, in the wake of announcements around new tariffs imposed by U.S. President Donald Trump and disappointing job growth numbers for the U.S.
U.S. futures fell after Trump’s Thursday announcement of tariff rates of up to 41 per cent for imports from dozens of countries across the globe, set to take effect Aug. 7. The White House said the tariff for products from Canada would rise to 35 per cent, effective Friday.
The order pushed back the tariff deadline earlier set for Aug. 1 and injected a new dose of uncertainty in an already unpredictable process that has been rattling markets since Trump returned to the White House in January.
The S&P 500 fell 1.6 per cent. The decline marks a sharp shift for the index, which hasn’t fallen by more than one per cent since June. It is also on track for a weekly loss following last week’s record-setting streak.
The Dow Jones Industrial Average fell 570 points, or 1.3 per cent as of 11:04 a.m. ET. The Nasdaq composite fell two per cent. Canada’s main stock index was down one per cent as of 11:29 a.m. ET.
Stocks in Europe and Asia also fell. Europe’s STOXX 600 was down 1.8 per cent on the day and 2.5 per cent on the week, on track for its biggest weekly drop since Trump announced his first major wave of tariffs on April 2.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.5 per cent, bringing the total loss this week to roughly 2.7 per cent.
“Trump’s new tariff directive, signed behind closed doors just ahead of the Aug. 1 deadline, slaps a new floor under global trade costs: a 10 per cent minimum rate for nearly all partners, with surcharges of 15 per cent or higher for surplus nations,” with Canada drawing particular ire, Stephen Innes of SPI Asset Management said in a commentary.
“This wasn’t just an update — it was a structural rewrite. The average U.S. tariff jumps from 13.3 per cent to 15.2 per cent, a seismic shift from the 2.3 per cent average before Trump retook office. This reshapes the cost calculus for everything from semiconductors to copper pipes,” he said.
Weak U.S. jobs report inflames worries
Worries on Wall Street about a weakening economy were heavily reinforced by the latest report on U.S. job growth. Employers added just 73,000 jobs in July, which is sharply lower than economists expected. The U.S. Labour Department also reported that revisions shaved a stunning 258,000 jobs off May and June payrolls.
The surprisingly weak hiring numbers led investors to step up their expectations for an interest rate cut in September. Rates have been held steady since December.
The yield on the 10-year Treasury fell to 4.24 per cent from 4.39 per cent just before the hiring report was released. The yield on the two-year Treasury, which more closely tracks expectations for Federal Reserve actions, plunged to 3.75 per cent from 3.94 per cent just prior to the report’s release.
Companies have been warning investors that Trump’s tariff policy, including current and proposed tariffs, has made it difficult to make forecasts. Walmart, Procter & Gamble and many others have warned about import taxes raising costs, eating into profits and raising prices for consumers.
Internet retail giant Amazon fell 7.5 per cent, despite reporting encouraging profit and sales for its most recent quarter. Technology behemoth Apple fell 1.6 per cent after also beating Wall Street’s profit and revenue forecasts. Both companies face tougher operating conditions because of tariffs.
Exxon Mobil fell 1.7 per cent after reporting that profit dropped to the lowest level in four years and sales fell as oil prices slumped as OPEC and OPEC allies ramped up production.
