Baseball’s All-Star Game is coming soon but tariff week is already in full swing, and the curve balls are coming thick and fast.
More letters with tariff rates look to be imminent and potentially more trade deals, too. On top of that, the president floated a 50% tax on copper imports and a 200% levy on pharmaceuticals on Tuesday.
The stock market wasn’t too fussed, finishing broadly flat. The bet appears to be that it’s all noise, and it won’t be that bad. To be fair, that’s been a good gamble since Trump took office–indexes remain near record highs.
But investors
must have some nagging doubts about the assumption that everything will be alright in the end. The now-well-known TACO trade–based on the idea that Trump Always Chickens Out–clearly isn’t exactly right. It’s likely tariffs will be substantially higher once they’re settled–the only question is how high they will end up being. It’s more the case that Trump just changes his mind a lot.
Traders certainly aren’t counting on TACO when it comes to copper–U.S. prices spiked after the tariff announcement. The critical metal could become the next flashpoint for markets.
The U.S. only produces about half the copper it consumes and can’t easily create more supply. Permanently higher domestic prices for the metal, crucial for electronic wiring, construction, and
energy, would be a major headache for companies.
The question is what would prompt Trump to change tack again. It was apparently bonds that got Trump to delay widespread tariffs in April, but the market isn’t
that jittery now. The reaction from industries that rely on copper could be a key indicator to watch.
The copper levy may not be the home run Trump thinks it is.
—Brian Swint
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President Hardens Stance on Trade Deadline
President Donald Trump says Aug. 1 is the absolute deadline for countries to hammer out trade deals or accept his unilaterally set tariff rates on their products. No extensions will be coming. He also said copper imports would be taxed at 50%, and warned of nearly 200% tariffs on pharmaceutical imports.
- Trump said during a cabinet meeting that he would continue issuing rate-setting tariff letters to the leaders of other countries. He appears to favor this unilateral approach versus a more time-consuming tête-à-tête with individual trade delegations, announcing his decisions on social media.
- It’s emblematic of Trump’s strategy, which has been to threaten high levies to draw countries to the negotiating table, then to pause those levies while deals are being worked out, then to draw a new line in the sand. Commerce Secretary Howard Lutnick said another 15 to 20 letters are coming.
- When copper tariffs become effective wasn’t clear. The tariffs on pharmaceutical products would have a year to 18 month grace period before kicking in to give companies time to reposition supply chains and move production to the U.S., Trump said.
- There are other sector
tariffs still pending, including for lumber and semiconductors. The tariffs on imports for specific sectors have been a sticking point in some of the trade negotiations with other countries.
What’s Next: The
current tariffs have brought in $100 billion so far this year, Treasury Secretary Scott Bessent said during Tuesday’s cabinet meeting. He added that tariff revenue could rise to $300 billion by the end of 2025.
—Liz Moyer, Anita Hamilton, and Reshma Kapadia
Nvidia Getting Closer to Record $4 Trillion Market Value
Nvidia is on the brink of a record-breaking valuation around $4 trillion, inching closer to the milestone on Tuesday. While the artificial intelligence chip maker’s stock closed at a record high of $160 apiece, it was still just short of beating Apple’s record-setting peak valuation of $3.915 trillion in December.
- Nvidia stock has been bolstered by expectations that the surge in demand for AI will continue. Investors have overcome the worst of their fears about U.S. trade policies, even though CEO Jensen Huang warned in May that curbs on chip exports to China could dent sales by $15 billion.
- Other chip stocks rose on Tuesday, including Advanced Micro Devices, Intel, and Qualcomm. Analysts struggled to find a clear reason for Intel’s 7% climb, though Mizuho managing director and technology specialist Jordan Klein noted a rotation into chips.
- There is some betting against the sector, too. The short interest, which is roughly the amount of shares sold short divided by the shares available to trade, in Russell semiconductor stocks averages about 7%, according to Bloomberg. That’s high. The average short interest in the S&P 500 is 3%.
What’s Next: To surpass Apple’s record, Nvidia shares would have to get to $160.46, according to Dow Jones Market Data. They would need to rise to $163.93
to make the semiconductor maker the first company ever to reach the $4 trillion mark.
—George Glover and Al Root
Apple’s CEO Succession Plan Suddenly Gets Murkier
A once leading candidate to replace Tim Cook as Apple’s CEO has instead announced his retirement, raising fresh questions about the CEO succession plan. Chief Operating Officer Jeff Williams will be succeeded as planned by
Sabih Khan, senior vice president of operations who has been there 30 years.
