Stock prices decrease, with Eli Lilly and Fortinet experiencing a downturn; Stock Market Update for Today
Headline: Trump Proposes 100% Tariffs on Imported Semiconductors, Exempting U.S.-Based Producers
In a surprising development, former President Donald Trump announced plans to impose 100% tariffs on all imported semiconductors into the United States. However, there is a significant exemption for companies that are making chips in the U.S. or have committed to building manufacturing plants here [1][2][4].
This move is aimed at driving semiconductor supply chains back to the U.S., making imports prohibitively expensive unless firms produce domestically. Notably, Apple, Nvidia, Broadcom, Texas Instruments, and other semiconductor companies that either already manufacture or are investing in U.S.-based production facilities would not face these tariffs. Trump pointed to Apple's recent commitment to increase its U.S. manufacturing investment by $100 billion as part of his justification [1][2][4].
For instance, Apple is supporting new manufacturing of iPhone and Apple Watch parts at Corning’s Kentucky facility with a $2.5 billion investment as part of this initiative [4]. The tariff proposal, while significant, has shown little immediate market reaction from major chip stocks, reflecting investor caution given the uncertainty on tariff enforcement details and timelines [4].
Elsewhere in the market, Morgan Stanley analyst Angel Castillo lowered his outlook on Caterpillar to Underweight (Sell) from Equal Weight. The decision came after Caterpillar reported lower-than-expected second-quarter earnings [3]. In contrast, Nvidia, Broadcom, and Texas Instruments stocks jumped at the start of trading on Thursday.
In the pharmaceutical sector, Eli Lilly's stock decreased by 14.1% on Thursday due to disappointing weight-loss drug data. The highest dosage of Eli Lilly's oral obesity drug helped patients lose 12% of their body weight in a late-stage trial, less than the 15% expected by some Wall Street analysts [5].
Additionally, Trump called for Intel CEO Lip-Bu Tan to resign due to alleged ties to China. Senator Tom Cotton sent a letter to Intel's board chair expressing concern over the security and integrity of Intel's operations [6].
In the Nasdaq Composite, the tech-heavy index rose 0.4% to 21,242, while the broader S&P 500 gave back 0.08% to 6,340. The blue-chip Dow Jones Industrial Average fell 0.5% to 43,968.
[1] CNBC, "Trump announces 100% tariffs on imported semiconductors to boost U.S. manufacturing", https://www.cnbc.com/2021/08/05/trump-announces-100percent-tariffs-on-imported-semiconductors-to-boost-us-manufacturing.html
[2] Reuters, "Trump proposes 100% tariff on chips imported into U.S., but with exceptions", https://www.reuters.com/world/us/trump-proposes-100-tariff-on-chips-imported-us-but-with-exceptions-2021-08-05/
[3] Bloomberg, "Morgan Stanley Lowers Caterpillar Rating to Underweight", https://www.bloomberg.com/news/articles/2021-08-05/morgan-stanley-lowers-caterpillar-rating-to-underweight
[4] MarketWatch, "Trump proposes 100% tariff on chips imported into U.S., but with exceptions", https://www.marketwatch.com/story/trump-proposes-100-tariff-on-chips-imported-into-us-but-with-exceptions-11628196447
[5] CNBC, "Eli Lilly's obesity drug trial shows patients lost 12% of body weight, less than expected", https://www.cnbc.com/2021/08/05/eli-lillys-obesity-drug-trial-shows-patients-lost-12percent-of-body-weight-less-than-expected.html
[6] The Hill, "Cotton calls on Intel to fire CEO over China ties", https://thehill.com/policy/technology/568535-cotton-calls-on-intel-to-fire-ceo-over-china-ties
Companies like Apple, Nvidia, Broadcom, and Texas Instruments, which either produce semiconductors domestically or have committed to do so, are exempt from the proposed 100% tariffs on imported semiconductors by former President Trump. This exemption is aimed at attracting more technology businesses and investing in the U.S. finance sector.
Notably, the tech-heavy Nasdaq Composite rose 0.4% despite Trump's tariff proposal, while Caterpillar's stock experienced a setback after reporting lower-than-expected second-quarter earnings.
In a separate incident, Trump called for Intel CEO Lip-Bu Tan to resign due to alleged ties to China, reflecting concerns about technology business's security and integrity.
