President Donald Trump said the U.S. would impose the 35% tariff next month on Canadian imports not covered by the United States-Canada-Mexico pact and planned to impose blanket tariffs of 15% or 20% on most other trading partners.
That comes on top of 50% tariff pledges on copper and Brazilian imports, which are set to lift the U.S. price of the metal and coffee, among other goods.
It also adds to the planned 25% tariffs on Japan and South Korea, and doused optimism of a more favorable deal with the European Union as investors awaited word on what levies Trump would assign the EU later on Friday.
After Wall Street stock indexes hit record closing highs on Thursday, S&P 500 and Nasdaq futures fell back ahead of today's bell. European and Japanese shares were in the red and the Canadian dollar slipped to two-week lows.
Somewhat weary of the seemingly endless back-and-forth on tariffs and attempting to look beyond the short-term headlines, investors are wary of overreacting as they brace for almost three weeks of 'ifs' and 'buts' ahead of the new August 1 deadline.
The effect on economic activity and prices may take months to materialize. In a thin week for data, the weekly jobless update remained robust.
The inflation impact is perhaps most immediate, but Thursday's long-bond auction matched decent demand for the 10-year note sale earlier in the week.
Federal Reserve easing expectations slipped back a touch, however, and both ten- and thirty-year yields ticked higher. Alongside gains against the Canadian dollar, the greenback's index firmed more broadly.
Fed officials struck a relatively benign tone. Arch dove Christopher Waller restated his preference for cutting rates again later this month, while saying the Fed's balance sheet run-off had some way to go. "We're just too tight and we could consider cutting the policy rate in July," he said.
San Francisco Fed boss Mary Daly said she still sees two rate cuts over the remainder of the year.
The White House, meanwhile, upped its attack on Fed Chair Jerome Powell - this time over the Fed's accounts and spending on its HQ renovations.
But tech and the artificial intelligence theme continued to enthuse stock investors, with Taiwan chip giant TSMC beating forecasts on its AI chip demand and Nvidia closing above a $4 trillion valuation for the first time on Thursday.
The second-quarter earnings season kicks into gear next week, with Delta Air Lines shares rallying 12% on Thursday after the carrier forecast third-quarter and full-year profit above Wall Street estimates. That lifted the broader airline sector.
The other big market gainer was Bitcoin, which rallied to an all-time high on Friday - powered by demand from institutional investors and Trump's crypto-friendly policies.
The world's largest cryptocurrency rose to a peak of $116,781.10 in the Asian session, taking its gains for the year so far to more than 24%. Gold was firmer too on the tariff jitters.
In China, a Shanghai regulator said it held a meeting this week for local government officials to consider strategic responses to stablecoins and digital currencies - a marked shift in tone for China where crypto trading is banned.
Bracing for GDP updates next week, Chinese shares bucked the downbeat global stock mood on Friday and pushed higher.
Elsewhere, sterling ebbed on a surprising monthly contraction in UK GDP, with jitters about Britain's public finances nudging gilt yields higher as finance minister Rachel Reeves prepares for the set-piece Mansion House speech next week.
In company news, BP's second-quarter results are expected to be affected by lower prices received for gas and oil, while its upstream output is set to be higher than previously forecast, the company said in a trading update on Friday ahead of results due on August 5.
In the euro zone, European Central Bank hawk Isabel Schnabel said the hurdle for another ECB interest rate cut is "very high" as the euro zone economy is holding up better than expected despite uncertainty over trade.
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