Below are the economic and market highlights for the week:
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Tariffs were back in the news this week as the July 9 trade deadline was pushed back to August 1. New tariffs were also announced ahead of the trade deadline extension to bring trading partners to the negotiating table. Japan and South Korea were slapped with 25% tariffs while Canada faced a 35% tariff rate. The Trump administration also announced it would lift blanket tariffs from 10-15% to 20% for most other countries.
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Industries entered the trade wars. Effective August 1, Washington announced it will slap copper imports with a 50% tax. The U.S. is the world’s fifth-largest producer, but last year imported nearly half of the copper it consumed, according to the U.S. Geological Survey. Most of those shipments came from Canada and Chile, which is the world’s largest producer. Copper is used in manufacturing everything from automobiles to mobile phones to computer chips. Analysts fear that tariff-induced price hikes on metals and other imported goods could prop up inflation and hit the profit margins of U.S. companies that need copper to build infrastructure or manufacture other products.
- The jobs market showed more signs of resilience amid the global trade wars. Initial weekly jobless claims totaled 227,000 for the week ending July 5. That was below the Dow Jones estimate of 235,000 and followed a stronger-than-expected U.S. jobs report released last week. The June jobs report showed 147K new jobs were created and the unemployment rate dropping to 4.10%.
Markets Hit New Highs Amid Trade Battles
With the One Big Beautiful Bill signed, sealed, and delivered, tariffs made their way back to the top of the Trump agenda. Markets had initially been rallying on the passage of the tax bill this week with both the S&P 500 and Nasdaq Composite Index hitting new all-time highs. However, the White House rattled some nerves persistently throughout the week, hoping to get trading partners back to the negotiating table after pushing back the July 9 trade deadline to August 1. The deadline extension came with more pressure on trading partners as the administration announced 25% tariffs on Japan and South Korea. On Friday, 35% tariffs were levied on Canada also effective Aug.1. While specific trading partners were singled out, a broader group of countries who have yet to sign deals were not necessarily out of the woods with the administration announcing that it will move to impose blanket tariffs of 15% to 20% on most, up from the current rate of 10%. Aside from country specific levies, industry specific levies were handed down with the U.S. slapping a 50% U.S. tariff on imported copper also effective Aug.1. In a relatively light week for economic news, investors largely brushed off the latest trade news to close the week relatively unchanged.
The Q2 market rebound and the bullish optimism heading into the second half of the year has been impressive. Investors have pushed their way through tariff headwinds, sticky inflation, and signs of a cooling economy. According to the latest weekly poll from the American Association of Individual Investors, bullish sentiment for higher stock prices in the next six months stands at 41.40%, above the historical average of 37.50%. Despite the market’s bullish run, headwinds do remain even if investors have opted to shake them off as of late. The latest tariff announcement looks likely to hit consumers in their pocketbooks. Thus far, consumers have been shielded from the ill effects as companies have refrained from passing on higher costs until final deals are reached. Now we appear to be in the final stretch with the August deadline fast approaching which also happens to coincide with the consumer-fueled back to school and holiday shopping seasons – which are make or break quarters for the U.S.’ consumer driven economy. The Q2 earnings season which kicks off in earnest next week should give us more color on the cost of doing business, particularly supply chain costs that could eventually impact consumers’ wallets. More industry specific tariffs levies could further complicate the inflation picture and harmony within the Fed. The dueling forces of tariffs and a slowing economy already has the FOMC split on whether to cut rates to spur growth or remain defensive towards inflation. Fed Chair Jerome Powell has gone on the record saying the central bank would have continued its interest rate cutting campaign had it not been for the trade tariffs. Markets may have signaled the all clear on tariffs and inflation, but the consumer will ultimately have the last say with their wallets.
The Week Ahead
Key reports include Q2 earnings, inflation, and retail sales.
Man Versus Snake
Today marks the start of the 12th annual Florida Python Challenge. Every summer for ten days, parts of Florida turn into a battleground between humans and one of the state’s most destructive invaders: the Burmese Python. These invaders are large, nonvenomous constrictor snakes that are non-native to Florida and have caused not only wildlife population declines, but also local extinction of mammals and have devastated the diversity of native birds, fish, and other snake populations. Apparently, there are good snakes that need to be protected from the Burmese Python.
To support conservation efforts, The Florida Python Challenge was launched in 2013. (Some Probity staffers think the challenge may have been inspired by the World’s Largest Rattlesnake Round-Up that’s been hosted annually for more than 65 years in Sweetwater, Texas.) The Florida Python Challenge is a 10-day competition hosted by the Florida Fish and Wildlife Conservation Commission (FWC) and the South Florida Water Management District that invites snake hunters to help eradicate these invasive reptiles in eight designated locations in Florida. Last year’s hunt saw 857 participants from 33 states and Canada collectively remove 195 pythons, with the grand prize winner capturing an impressive 20 snakes. Burmese pythons can live up to 20 years and grow as long as 23 feet and weigh over 200 pounds. They can lay 50 to 100 eggs at a time and lack natural predators while eating nearly everything in their path, including eggs, rabbits, raccoons, opossums, bobcats, deer, and alligators. The invasive snakes are distributed across more than a thousand square miles in the Everglades and southern Florida.
The Florida Python Challenge is not a free-for-all. There are rules. Hunters may not use dogs, drones, traps, explosives, chemicals, bait, or firearms in the challenge. The snakes must be killed humanely according to the rules listed on the website. Road-killed Burmese pythons are ineligible for the competition. In order to participate, hunters must register online and complete the required online training. The person who removes the most pythons will win $10,000. There are additional cash prizes for the most and longest pythons removed in three different categories, including novice, professional, and military.
Outside of the Florida Python Challenge, FWC offers year-round python removal opportunities on 32 Commission-managed lands. Since the year 2000, over 23,000 Burmese pythons have been removed from Florida’s environment. If hunting live invasive species sounds unappealing, horticulturists and gardeners offer their own version of conservation efforts through annual “Weed Wrangling” where people can volunteer to help rescue our public parks and green spaces from non-native plants and trees. You can read more about this friendlier program here.