Canada fires back with 50% tariffs 🍁

Welcome back to the Day Trading newsletter 📈

Wall Street came back from the long weekend to a wall of bad news:

Brent crude flirting with $100, government bond yields at multi-year highs from Paris to Berlin, and the Dow down more than 500 points at the open.

And that's before we even get to the trade war on our northern border.

Let’s get into it 👇️ 

🔼 Qualcomm shares jumped as much as 10% Tuesday after it landed Amazon as a data center chip customer in a deal that could be worth up to $60 billion. Qualcomm will build "multiple generations" of custom AI inference chips for Amazon Web Services, and issued Amazon warrants for 25 million shares at $161.26 each, a $4 billion stake that vests as Amazon buys up to $60 billion of Qualcomm gear. It's Qualcomm's second hyperscaler win after Meta, and a direct shot at Nvidia's data center turf.

💊 Novartis plunged about 9% Tuesday, its worst day since March 2020, after its third drug trial failure in a week. Del-desiran, a muscle-wasting-disorder treatment Novartis picked up in its $12 billion Avidity Biosciences buyout, failed a Phase 3 trial. That followed a failed heart drug trial last week and a pause on eight cell-therapy trials after three patient deaths. Barclays says Novartis' 20% valuation premium to the sector "may now be debated."

⛽️ Gas prices hit a Labor Day record of $4.15 a gallon on Monday, the first time the holiday average has ever topped $4. The old record was $3.82 in 2012, and prices are about 30% above the $3.20 drivers paid a year ago, per AAA. Diesel set its own record at $5.90. Crude near $92 for WTI is the culprit; the switch to cheaper winter-blend gas, which the EPA allowed early on Sept. 1, is the only relief in sight.

🛬 An Amazon cargo jet overran the runway at Miami International Airport on Sunday, killing at least five people and injuring five more. The Boeing 767, flown for Amazon by contractor 21 Air, slid about 1,300 feet past the runway, hit a van and a car, and burst into flames. Two of the airport's four runways remain closed, more than 160 flights were canceled Sunday, and the NTSB says it will examine the Amazon-21 Air contract itself.

🇨🇳 China's exports jumped 25% in August from a year earlier, pushing its trade surplus to $119.09 billion. Demand for AI components, chips and Chinese-made cars is doing the heavy lifting, but imports rose 28.2%, short of the 30% forecast, a sign domestic demand is still soft. The numbers land weeks before a planned Trump-Xi meeting, where Beijing's export machine will be the elephant in the room.

📊 Bloom Energy, Illumina and Everpure will join the S&P 500 on Sept. 21, replacing Molson Coors, The Trade Desk and Builders FirstSource. Bloom, a fuel-cell maker riding the AI data center power buildout, is up about 190% this year and rose more than 6% Tuesday on the news. Index funds have to buy every addition before the open on the 21st, which is why inclusion alone can move a stock.

💼 Jaguar Land Rover will cut 4,000 jobs, about 10% of its global workforce, over the next two years. The Tata Motors-owned luxury brand is chasing £1.7 billion ($2.3 billion) in savings as cheaper Chinese EVs, U.S. tariffs and last year's crippling cyberattack squeeze margins. It comes days after Volkswagen approved another 50,000 job cuts. Europe's automakers are in full retreat.

💴 The Japanese yen hit 152.89 per dollar Tuesday, its strongest since February, as traders bet the Bank of Japan hikes rates next week. The yen has gained more than 5% this quarter on expectations of a quarter-point BOJ hike to 1.25% on Sept. 17-18, and the ECB is expected to raise rates Thursday. A stronger yen matters here because Japan is among the biggest foreign holders of Treasurys, and higher rates at home give them a reason to bring money back.

At 12:01 a.m. Tuesday, Canada's retaliatory tariffs on American goods took effect.

The new duties run 15%, 25% or 50% on more than 700 U.S. products worth C$27.6 billion (about US$20 billion), and they're aimed at the sectors Washington hit hardest: steel, aluminum, dairy, appliances, farm equipment, paper and electronics.

Canadian tariffs on U.S. steel, aluminum and iron products doubled from 25% to 50%, while furniture, motorcycles, clothing and some beauty products were among the goods hit with the highest rate.

Milk, cream and whey get 50%; softwood lumber and most appliances get 25%; plywood and smartphones get 50%.

Ottawa calls it a "dollar for dollar" answer to the 50% tariffs President Trump slapped on roughly $20 billion of Canadian goods on Aug. 22, after trade talks collapsed the night before.

Those U.S. duties were imposed under Section 338 of the Tariff Act of 1930, a Depression-era provision no president had ever actually used to levy tariffs.

Canada's existing 25% counter-tariff on U.S. autos stays in place on top of the new list.

The rhetoric is getting worse, not better.

Commerce Secretary Howard Lutnick says Canada "blew up" a nearly finished deal "for political reasons only." Prime Minister Mark Carney fired back that "unelected Cabinet members in the United States" aren't experts on Canadian politics, and said talks resume "when the Americans are ready."

Then on Monday, Trump posted "NO MORE SELLING BOMBARDIER IN THE UNITED STATES!" and demanded the Canadian jet maker build in America. Bombardier, which sells roughly half its jets into the U.S., fell as much as 7% in Toronto on Tuesday morning, its first trading day since the post, before paring the loss.

Canada is one of the two biggest buyers of American-made goods on the planet.

The U.S. exported $333.6 billion of goods to Canada in 2025 and imported $381.9 billion. The tariffed slice is small relative to that total, but it's concentrated: a U.S. dairy exporter, appliance maker or paper mill that relies on Canadian customers just got 25 to 50 points less competitive overnight, and small and mid-sized businesses have the least room to absorb it.

Ottawa has put up a $7.5 billion support package for its own workers and businesses, on top of $25 billion already committed since the tariff fight began in April 2025.

The bigger risk is what's queued up next.

Trump has said that on Jan. 1, 2027, tariffs on all Canadian cars, trucks and auto parts go to 50%, double today's 25% rate (U.S. tariffs on Canadian steel are already at 50%).

A deal that would have cut those rates was on the table two weeks ago. Now both sides are escalating, and every round adds to input costs on both sides of the border at a moment when Brent is near $99, gas just set a Labor Day record, and the Fed meets in a week with markets pricing roughly 60% odds of a rate hike.

What to watch:

• Friday's CPI print is the first test of how much tariff and energy costs are feeding into prices. Watch the loonie, which has sat near 72 U.S. cents for most of five years and drew Trump's ire over the weekend.

• Watch cross-border names: steel (Nucor, Steel Dynamics, Stelco owner Cleveland-Cliffs), autos (Toyota and Honda build more than three-quarters of Canada's vehicles, more than GM, Ford and Stellantis combined, plus parts giant Magna), lumber and homebuilders, and anyone selling dairy or appliances north of the border.

• And watch for any sign that the two sides are talking again. Carney says the door is open. Trump says Canada's economy will "collapse" first.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.