By Joyce Yu
Philadelphia, PA–Marking the first trading day in the second half of this year, Wall Street is expected to trade narrowly as investors remain cautious about trade tensions between the U.S. and its trading partners.
Canadian government upset many American exporters on its national day yesterday with announcement to impose tariffs on US exports worth 16.6 billion Canadian dollars ($12.5 billion). Canada’s latest retaliation against US steel and aluminum tariffs includes additional tariffs of 25% on more than 40 US steel products, and a tax of 10% on over 80 other American items such as toffee, maple syrup, coffee beans and strawberry jam.
As the largest exporter of steel to the United States by value last year, Canada is expected the feel most pain from US steel tariffs which has also drawn responses from the EU and Mexico. Last week, the European Union imposed additional tariffs of 25% on US products such as motorcycles, orange juice, bourbon, peanut butter, cigarettes and denim. Mexico has also imposed new tariffs on the United States. China, too, is expected to retaliate with duties of its own on the same value of American goods with U.S. tariffs on $34 billion of Chinese products taking effect on July 6.
Shane Oliver, chief economist at AMP Capital, said in a Saturday note, “[U]ltimately, the proof will be in the pudding [on foreign investments] and in the meantime, there is still no sign of the U.S. and China restarting trade negotiations ahead of the July 6 start date for tariffs … Our base case remains that some form of negotiated solution will be reached, but things are likely to get worse before they get better.”
Investors are expected to refrain from taking major investment decisions for retaliation concerns that could slow down global economic growth. China’s economic data over the weekend added to that worry. Official manufacturing Purchasing Managers’ Index declined to 51.5 for the month of June, missing the 51.6 forecast, although the figure still came in above the 50-point level indicating growth.
On individual stocks, Tesla is in focus today. In an internal email sent out on Sunday, Tesla CEO Elon Musk said the company “just became a real car company” by building more than 5,000 of the sedans in the last week of the second quarter, according to Bloomberg. The company’s regulatory filing Monday confirmed the information.
This is undoubtedly great news to many Tesla customers who have waited for their cars for more than two years. But what’s critical to the company now is to prove this level of output is sustainable as producing 5,000 units of one vehicle in a week is far from unheard of in the auto industry after all.
“Now that Tesla has achieved the 5,000 mark, it needs to do so on a steady, routine basis and with excellent quality,” Michelle Krebs, an analyst with car-shopping website Autotrader, told Bloomberg.