Stocks fell across the board on Friday after President Trump threatened a new 35% tariff on Canada. CBS News contributor Javier David breaks down the market's reaction.

Wall Street

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

US stocks experienced a broad decline after President Trump announced a potential 35% tariff on Canadian imports, citing concerns over fentanyl trafficking. Despite this, market indicators such as the VIX remain low, suggesting that investors are not significantly alarmed by the ongoing tariff threats.

Analysts point out that while the tariffs could increase costs for businesses and consumers, especially those with strong ties to Canada, the overall risk appetite in the market remains robust. The unpredictability of tariff policy continues to complicate economic outlooks and may impact central bank decisions on interest rates. Other countries, including Japan and South Korea, are also facing similar tariff deadlines, raising concerns about broader trade tensions.

Changes in Trump's tariff policies do not seem to spook investors

All right. Stocks fell across the board today after President Trump threatened a new 35% tariff on Canada. In an open letter to Canadian Prime Minister Mark Carney last night, Trump cited the flow of fentanyl as part of the reason for the rate, writing, quote, if Canada works with me to stop the flow of fentanyl, we will perhaps consider an adjustment to this letter. Now, Carney responded on X, writing, in part, Canada has made vital progress to stop the scourge of fentanyl in North America. We are committed to working with the United States. And joining me now, I should say, is CBS News contributor Javier David. He's also a business editor for the Dallas Morning News. Javier, great to have you on. I love what the Dallas Morning News does. So we've seen constant changes in the Trump administration's tariff policy. What does the market reaction tell you about how investors are feeling? You know, simply put, investors aren't scared enough, weirdly enough, of tariffs to stop buying stocks. Risk's appetite is as high as it's ever been. We have the VIX, which is kind of Wall Street's fear gauge. It collapsed back in April, but now it's sort of, you know, at those lows again. We've had a week of unpleasant surprises. We've had the 50 percent tariff on Brazil. We now have this 35 percent threat of a levy on Canada. Who knows what next week will bring, but it's rather odd to see stocks kind of perched near these record highs, even though we gave some of that back today. But broadly speaking, the market really routinely continues to underestimate tariff risk. The threat waxes, it wanes, and depending on the day, it diminishes. But it's like a lot like inflation, it never fully disappears. You know, front of mind for us are the businesses that are no doubt going to be impacted by any additional tariffs. Canada is one of the country's largest trading partners. How significant would this 35 percent tariff be for U.S. businesses if it were to take effect August 1st, as the president says? Well, Canada has at least one benefit going for it in that we're still part of the U.S.-Mexico-Canada trade agreement. So some of the problems associated with higher tariffs are limited. But the bottom line is like companies that deal a lot in Canada or like have either large markets in Canada or presence in Canada, they just need to be prepared to pay more. And that means that they need to get ready to roll those or pass those costs along to some of their consumers. Even if they eventually get rolled back, they have to make plans for them now. So that's part and parcel of the unpredictable nature of this tariff policy and the impact it really has on consumers and businesses. It complicates the outlook and it really makes it hard for the Federal Reserve to deliver these rate cuts that the president has adamantly demanded that he wants. But the central bank kind of steadfastly insists it needs to wait on. And a big part of the reason why is because tariffs are taxes and taxes are inflationary. Javier, it's not just Canada that's facing this August 1st deadline. So what other deals are U.S. investors looking out for when it comes to several other countries that are also facing that deadline? Yeah, I mean, it's not looking terribly encouraging on other fronts as well. We've got Japan and South Korea next in line. India's had talks. They've been slightly less bumpy, but the Japan and South Korea talks have been sort of a sticky widget and all three of those countries are fairly close allies. So the fact that there's nothing inked yet is not really encouraging and it likely means that there's a very real possibility that everyone on both sides are going to have to brace for higher levies at some point. Yeah, certainly something we're going to be following very closely in the days to come. Javier David, thank you so much for your time and insight. Yeah.

A preliminary report depicted confusion in the cockpit shortly before an Air India jetliner crashed, killing 260 people last month, after the plane's engine fuel cutoff switches almost simultaneously flipped, starving the engines of fuel.

Ahmedabad

Air India crash report shows confusion over engine switch movement

An Israeli airstrike hit Palestinians near a medical center in Gaza on Thursday, killing 10 children and six adults, local health authorities said, as ceasefire talks dragged on with no immediate deal expected. This report contains graphic and disturbing images.

Jerusalem

Middle East Conflict

Israeli strike kills children near medical clinic in Gaza

Russian strikes against Ukraine persisted overnight and reportedly injured at least nine people and caused damage to a maternity hospital, according to officials. This comes as President Volodymyr Zelenskyy meets with European allies in Rome.

Kyiv

Ukraine Invasion

Russia launches more strikes, damages Ukraine maternity hospital

Israeli Prime Minister Benjamin Netanyahu is returning to Israel without a ceasefire deal with Hamas despite optimism from the Trump administration. CBS News' Elizabeth Palmer reports.

Tel Aviv-Yafo

Netanyahu returns to Israel without Gaza ceasefire deal

Immigration and Customs Enforcement (ICE) raids in California turned violent after protesters clashed with agents from the Trump administration carrying out an operation at a Camarillo farm.

Camarillo

Protesters clash with ICE agents over immigration operation

CNN’s Isa Soares explains how a crippling 50% tariff on goods from Brazil may not be all about the economy.

Washington

Trump targets Brazil with 50% tariff

Volunteers in Texas are searching for flood victims and combing through debris along a 30 mile stretch of the Guadalupe River. CNN’s Ed Lavandera spoke with Texans who are coming together to bring closure to their community.

Center Point

Urgent search operations for flood victims stretch miles in Texas

U.S. President Donald Trump said the United States would impose a 35% tariff on imports from Canada next month and planned to impose blanket tariffs of 15% or 20% on most other trade partners.

Trump puts 35% tariff on Canada, eyes 15%-20% levies for others

Volunteers in Comfort, Texas, are digging through debris with heavy equipment and cadaver dogs, searching for flood victims. U.S. President Donald Trump is set to visit Friday, raising questions about his plan to scale back federal disaster relief.

Texas

Volunteers dig through Texas flood wreckage ahead of Trump visit

Russian Foreign Minister Sergey Lavrov and US Secretary of State Marco Rubio have held rare face-to-face talks on the sidelines of an ASEAN meeting in Malaysia, discussing the war in Ukraine, as well as developments in Iran and Syria.

Kuala Lumpur

Top U.S., Russia diplomats discuss Ukraine on ASEAN sidelines

Russia has intensified its aerial attacks on Ukraine, using upgraded drones designed to cause more damage and evade air defences. In Kyiv, a young woman captured video of the drones overhead — just before explosions echoed through the city.

Russia’s upgraded drone tactics bring intensified attacks across Ukraine

The Ventura County Fire Department said they responded to calls of people having breathing problems at a farm in Ventura County, California, after federal agents appeared to deploy tear gas canisters into the crowd.

Ventura County

Intense standoff in California between protesters, federal agents

A federal judge has green-lit a class action lawsuit challenging President Trump's executive order to end birthright citizenship and issued a preliminary injunction blocking the order.

Judge blocks Trump's birthright citizenship order

A partial tunnel collapse in Los Angeles temporarily buried 31 workers in Los Angeles, California. CBS News' Carter Evans reports on the rescue operation.

Los Angeles

31 trapped workers rescued after tunnel collapse

U.S. Secretary of State Marco Rubio expressed “disappointment and frustration” over continued Russian attacks on Ukraine and said new sanctions on Russia are a “real option.” Kylie Atwood has more details from Kuala Lumpur, Malaysia.

Rubio: New Russia sanctions a ‘real option’

With Russia again bombarding Ukraine with drones, U.S. President Donald Trump says he’s considering sending another missile defence system to Ukraine.

Trump muses missile defence system for Ukraine

Officials in Texas are promising to address concerns about flood warnings in parts of the state, but say the ongoing search-and-rescue efforts must be complete first.

Texas officials to address flood warnings after search complete

Linda Yaccarino is stepping down as CEO of X after two years leading Elon Musk's social media company. Yaccarino's departure comes one day after the company's Grok chatbot began pushing antisemitic tropes in responses to users.

San Francisco

Yaccarino steps down as CEO of Elon Musk's X

Parts of Ukraine were on fire overnight after Russia launched its largest drone attack on Ukraine since the war unfolded. Just hours earlier, Trump directly called out Vladimir Putin for stalled peace talks.

Moscow

Trump calls out Putin for stalled peace talks

The Trump administration branded the event as one of the steps it is taking to reshape its relationship with the African continent.

Five African leaders have lunch with Trump

The search continues in central Texas for the more than 160 people still missing from the deadly floods that hit over the Fourth of July. CBS News reporter Karen Hua has more.

Kerr County

Recovery operations ongoing in Texas as more than 160 still missing

U.S. President Donald Trump announced on social media that he issued tariff letters to Algeria, Brunei, Iraq, Libya, Moldova and the Philippines.

Trump sends tariff letters to six more countries

Video released by the Houthi media center shows the bulk carrier ‘Magic Seas’ being attacked and later sinking in the Iran-backed rebel group’s first attack this year on a commercial shipping vessel in the Red Sea.

Sana'a

Houthi rebels claim responsibility for attack on ship in Red Sea

The European Court of Human Rights in Strasbourg ruled Russia violated international law in Ukraine and was responsible for the downing of Malaysia Airlines Flight MH17.

Top European court rules Russia violated international law in Ukraine

The death toll from the July Fourth flash flood that ravaged a swath of central Texas Hill Country rose on Tuesday to at least 109, many of them children, as search teams pressed on through mounds of mud-encrusted debris looking for scores of people still missing.

Texas flood death toll hits triple digits, tally of missing tops 180

U.S. President Donald Trump pushed back during his Cabinet meeting about a question regarding Jeffrey Epstein. The DOJ claims Epstein had no list of clients, which is drawing criticism from some of the president's supporters.

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The copper industry is facing new uncertainty after U.S. President Donald Trump said he will impose 50 per cent tariffs on all copper imports. More than half of all Canadian copper exports go to the U.S.

Ontario

Trump threatens 50% tariff on copper imports

CNN’s Josh Cambell reports on questions over a lack of flood warning signals and lagging investment in river gauges in Kerr County after deadly floods killed over 100 people in Central Texas.

Officials face questions over preparedness for Texas floods

Hundreds of firefighters battled a fast-moving wildfire that reached the outskirts of the southern French city of Marseille on Tuesday, forcing people to stay indoors and the nearby airport to close.

Marseille

France wildfire shuts down Marseille airport

Liverpool's Portuguese forward Diogo Jota was probably speeding when the Lamborghini car he was driving crashed in northwestern Spain, killing him and his brother, police said in a preliminary report.

Changes in Trump's tariff policies do not seem to spook investors

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