Markets wobble after Trump threatens Canada with 35% tariff over alleged ‘flow of Fentanyl’

• The S&P 500 followed a record-breaking Thursday by dipping 0.33% Friday after President Donald Trump said he would impose a 35% tariff on Canada on August 1.

The stock market dipped on Friday after President Donald Trump issued his latest tariff threat against Canada. The S&P 500 posted a daily decline of 0.33% and was essentially flat over the past week. The Nasdaq notched a daily drop of 0.23%, and the Dow Jones fell 0.63%. 

The lackluster trading day follows a stellar Thursday when the S&P 500 posted a record high of 6,280 points. But several hours after market close on Thursday, Trump posted a letter to Truth Social, the social-media platform his family’s business owns, in which he threatened Canadian Prime Minister Mark Carney with a 35% tariff come August 1.

The 47th president reminded Carney that the U.S. had imposed a 25% tariff against Canada in February for its alleged “failure” to stop the flow of fentanyl across its border into the States. He also complained about his northern neighbor’s reciprocal tariffs, which Canada implemented in retaliation for Trump’s tax on Canadian goods. 

“If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter,” wrote Trump. “These Tariffs may be modified, upward or downward, depending on our relationship with your Country. You will never be disappointed with the United States of America.”

In response, Carney said he and his team would continue to negotiate with the U.S. up until Trump’s deadline. “Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses,” wrote the prime minister on X. “We will continue to do so as we work towards the revised deadline of August 1.”

Meanwhile, Trump told NBC on Thursday he was considering upping blanket tariffs on most U.S. trading partners to 15% or 20%. The previous rate his administration had decided on for most countries was 10%.

Friday’s stock market wobble comes amid an extended rally in the markets since late April. After Trump unveiled his severe tariff policies on April 2, a date he called “Liberation Day,” major stock indices like the S&P 500 tanked. But, beginning in late April, they rallied as investors grew unafraid of Trump’s tariff bluster.

By early May, the markets had regained most of their April losses. And by late June, the S&P 500 notched record highs as Trump announced tariff deals with China and other major trading partners. 

This story was originally featured on Fortune.com