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Investing.com-- The S&P 500 fell Friday after President Donald Trump’s move to impose a 35% trade tariffs on Canada starting next month ramped up fresh concerns about a global trade war.
At 1:06 p.m. ET (17:06 GMT), the Dow Jones Industrial Average fell 301 points, or 0.7%, the S&P 500 index dropped 30 points, or 0.3%, and the NASDAQ Composite was flat.
Trump announces 35% tariff on Canada stoking trade war fears
The S&P 500 and NASDAQ Composite slipped from record closing highs after Trump released a letter outlining a 35% trade tariff against Canada, effective from August 1. The new duties will be in addition to Trump’s recent sectoral tariffs.
Trump said the levy was in part aimed at pressuring Ottawa into stemming the illegal flow of fentanyl across its border and into the United States. The president also alleged unfair trade practices by Canada, in that Ottawa already had extremely high tariffs against several U.S. companies and sectors.
The president has released a slew of letters this week outlining tariffs against several major economies, including a 25% tariff each on South Korea and Japan, and a 50% tariff on Brazil.
Brazil said it would reciprocate should the U.S. follow through 50% tariff
Trump also said on Thursday that the European Union could receive a letter on tariff rates by Friday, throwing into question the progress of trade talks between Washington and the major trading bloc.
Banks to lead new earnings season
In the corporate sector, sentiment was cheered by market darling Nvidia (NASDAQ:NVDA) closing on Thursday above a $4 trillion valuation for the first time ever, strengthening its spot as the world’s most valuable listed company.
Additionally, Levi Strauss (NYSE:LEVI) stock rose after the jeans maker raised its sales guidance, saying it expects it will absorb some tariff costs for now.
PENN Entertainment Inc (NASDAQ:PENN), meanwhile, fell more than 5% on fears of slowing growth ahead after Iowa and Indiana reported a decline in nationwide gaming revenue.
The second quarter earnings season will begin in earnest next week, with a host of major banks, including JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C) and Bank of New York Mellon (NYSE:BK) set to report on Tuesday.
CPI release looms large
The economic data slate is largely empty Friday, and attention is turning to next week’s release of the June’s consumer price index, which is expected to show a monthly rise of 0.3%.
Recent minutes from the Fed’s June meeting showed only "a couple" of officials said they felt interest rates could be reduced as soon as this month, with most remaining worried about inflationary pressure they expect from Trump’s tariffs.
Fed fund futures indicate a slim chance of a rate cut at the end-July meeting, but suggest easing in September is likely.
Peter Nurse, Ambar Warrick contributed to this article