Nasdaq pulls back from record high as 35% Canada tariff stirs trade anxiety
Nasdaq drops 0.6% on tariff worries
The Nasdaq composite index is trading in negative territory during Friday’s premarket session after President Donald Trump announced a fresh round of tariffs targeting Canada and hinted at broad duties on other trading partners. As of early trading today, July 11, the index has slipped by 0.6%, reflecting immediate investor concern over the potential impact of escalating trade tensions on global tech supply chains.
• Nasdaq drops 0.6% today amid concerns over Trump’s fresh tariff threats
• Thursday’s bounce off the 20-day EMA led to a new high at 20,650
• RSI warns of overbought conditions while tariff risks challenge AI-driven momentum
On Thursday, the Nasdaq composite faced initial downward pressure and retested its midweek low, but the 20-day exponential moving average on the one-hour chart provided critical support. This technical cushion allowed the index to recover and surge to a new record high at 20,650. The swift rebound showcased the strong appetite for tech stocks, fueled largely by optimism surrounding AI-driven growth.
NASDAQ price dynamics (May - July 2025). Source: TradingView
Despite this push to record levels, the daily relative strength index has now touched the key 70 mark. This level separates bullish from overbought conditions, suggesting that while the market’s momentum has been impressive, there may be limited upside before a potential pullback. A further rise into overbought territory could either reinforce strong growth expectations or warn of an impending correction, depending on subsequent price action and market sentiment.
Nasdaq to retest short-term support if tariff escalation breaks investor confidence
Fundamentally, the new tariff measures pose a fresh layer of risk. Trump announced a 35% tariff on Canadian imports effective August 1, marking an increase from the 25% rate set in March. He also floated the idea of a blanket 15% or 20% tariff on other countries, a sharp rise from the existing 10% baseline. These aggressive moves have sparked fears of retaliatory measures, especially from Canada and the European Union, which is preparing to respond formally.
Despite these headwinds, the Nasdaq has shown resilience in recent months. Much of this strength has been attributed to the robust AI stock rally that has consistently driven tech valuations higher. The index’s week-to-date gain sits just above 0.2%, indicating subdued progress over the past few days, while its month-to-date performance has been stronger, rising 1.4%.
Investors are now balancing the positive momentum from AI innovation against the geopolitical uncertainty created by trade policies. While the technical backdrop suggests further highs are possible, the overbought signals and tariff concerns highlight the fragile nature of current gains. If buyers continue to dominate and the index manages to stay above short-term support levels, new all-time highs may be achievable in the coming sessions. However, any escalation in trade conflicts or profit-taking on extended gains could trigger a sharp reversal, testing the strength of the recent rally.
Investors shifted focus to strong earnings and AI growth, ignoring trade and inflation risks. The Nasdaq held steady near highs, awaiting fresh economic signals and labor data.
