Lexicon Financial Group Weekly Update — July 22, 2026

Jul 24

“Smoot and Hawley ginned up The Tariff Act of 1930 to get America back to work after the Stock Market Crash of ‘29. Instead, it destroyed trade so effectively that by 1932, American exports to Europe were just a third of what they had been in 1929. World trade fell two-thirds as other nations retaliated. Jobs evaporated.”

— Elaine Chao, an American businesswoman and former United States Secretary of Labor

From the desk of Craig Swistun, CIM, MFA-P, Portfolio Manager, Raymond James Investment Counsel, and Wayne Hendry, Client Relationship Manager, Raymond James Investment Counsel

ISSUE 238

NOTE: We’ll be taking a one-week summer break. The regular Weekly Update will return in early August.

Looking Around

You may recall that in the 1985 film, Back to the Future, Marty McFly (played by the then effervescent Michael J. Fox) gets transported back to the 1950s in a modified DMC DeLorean. Sometimes it feels like we’ve gone back in time as well. Just look at where we are with trade tariffs.

The tariff train has left the station once again, as the United States (U.S.) is taking economic action against more than approximately 60 trading partners, including Canada. According to U.S. Trade Representative (USTR) Jamieson Greer, the White House is imposing these new tariffs under Section 301 of the Trade Act of 1974, following an investigation completed in March of this year. The USTR probe included two rounds of public hearings and more than 2,100 public comments, resulting in findings that some countries—Canada, Mexico, China and dozens of others—were not sufficiently screening goods produced by child or forced labour. The new duties have been set up under three categories: 10 per cent for countries with forced-labour prohibitions, including Canada and Mexico; 10-12.5 per cent net of Most-Favoured-Nation rates for some products from the EU, Taiwan, Japan, Korea, and Switzerland; and 12.5 per cent for the remaining countries.

All of this has left people scratching their heads.

But the real “back in time” moment came earlier, when the USTR invoked never-before-used Section 338 of the Tariff Act of 1930 to introduce anti-discrimination tariffs against roughly five per cent of Canadian goods imported into the U.S.

Some trade experts say this new tariff move has little to do with forced labour and more to do with Trump administration trying to recreate what they lost when the Supreme Court abruptly ruled against tariffs a few months ago. These new tariffs too, will likely end up being challenged in court since the U.S. Constitution specifically assigns the power to levy tariffs to Congress, and not the President. (1)

Time will tell what the impact of these new tariffs will be on the affected economies. For now, stock markets appear more concerned with the conflict in Iran.

Read and Watch

Want deeper insight into topics in your Weekly Update? Then, read and/or right click: ‍

Six takeaways for Canada from latest U.S. tariff threats; GDP likely rose again in May

War and Tariffs Threaten a Resilient U.S. Economy Again

EU shrugs off Trump's latest tariff threat on generics

Japan's Nikkei ends more than 2% lower on AI spending worries

‘Structural divergence’ in China’s economy exposes a growing problem

Raymond James Markets & Investing: Inflation data, early earnings and geopolitics shape the market outlook - Raymond James CIO Larry Adam, July 17, 2026

Raymond James Economics & Policy: Federal Reserve chairman’s views are starting to become clearer - Raymond James Chief Economist Eugenio J. Alemán, July 17, 2026

Looking Back

Last week, the Toronto Stock Exchange's S&P/TSX Composite index (TSX) edged lower from its highest level in more than three ‌weeks. The selloff in U.S. semiconductor stocks and other high-flying shares accelerated dented sentiment. However, gains in energy companies kept declines in check. Also, according to domestic data, foreign investors bought a ⁠net C$7.90 billion ($5.63 billion) in Canadian securities in May, following an upwardly revised C$46.92 billion total purchase in April. (2)

Last week saw a reversal of the prior week’s large-cap tech outperformance for major U.S. stock indexes which closed down. The Nasdaq Composite and S&P 500 Index performed the worst, while the Dow Jones Industrial Average and Russell 2000 Index did so to a lesser extent. The information technology and communication services sector posted the steepest losses, weighed down by large-cap tech and artificial intelligence (AI)-linked shares. The energy sector, however, advanced in line with rising oil prices amid further escalating tensions between the U.S. and Iran.

On the economic front, inflation data was cooler than expected. Consumer inflation slowed considerably in June, which helped send Treasury yields lower and reduced fears of a near-term Federal Reserve rate hike. The Bureau of Labor Statistics reported that its consumer price index (CPI) fell 0.4 per cent month over month. This was below consensus expectations for a 0.1 per cent decline and down from a 0.5 per cent increase in May. This decrease—the largest since April 2020—was driven by a 5.7 per cent drop in energy prices. Given what is happening now in the Middle East, this may be reversed.

Producer prices also surprised to the downside—the producer price index (PPI) fell 0.3 per cent in June compared with expectations for no change, as final demand goods prices dropped 1.4 per cent amid a 6.4 per cent decline in energy costs. As a result, the market-implied probability of a July rate hike fell from roughly 40 per cent, before the inflation reports, to about 14 per cent by Friday afternoon. Elsewhere, economic data released last Thursday highlighted continued resilience in consumer spending and the labour market.

The pan-European STOXX Europe 600 Index ended last week (which was a volatile one) broadly unchanged—up 0.07 per cent in local currency terms as weakness in tech stocks in the U.S. and Asia spread to Europe. Investors digested quarterly corporate earnings reports, signs of reescalation of the tensions in the Middle East, and higher oil prices. Other major European stock markets closed lower or flat for the week. Notably, inflation in the Eurozone, similar to the U.S. and Canada, fell to 2.8 per cent.

Stock markets in Japan suffered significant losses last week. This is largely driven by bearish sentiment on technology stocks and concerns mounting about whether companies within the AI complex can sustain their lofty valuations. The escalating conflict in the Middle East and surging oil prices dampened investors’ risk appetite further.

Stock market in mainland China wilted, thanks to a renewed sell-off in AI, memory-chip, and other semiconductor shares. China’s gross domestic product expanded 4.3 per cent year over year in the second quarter but this was below the 4.5 per cent consensus estimate and down from 5.0 per cent in the first quarter. China’s exports surged in June amid weak household consumption, business investment, and property activity. (3)

The opinions expressed are those of Craig Swistun and not necessarily those of Raymond James Investment Counsel which is a subsidiary of Raymond James Ltd. Statistics and factual data and other information presented are from sources believed to be reliable, but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James advisors are not tax advisors, and we recommend that clients seek independent advice from a professional advisor on tax-related matters.