^GSPC Today: February 20 — Record US Trade Gap Undercuts Tariff Bet

Trump tariffs are back in focus as the US trade deficit reached $901.5 billion in 2025 and the goods gap hit about $1.24 trillion. Markets are testing whether Trump tariffs reduce deficits or just reroute trade. For Canadians, the answer matters for currency, TSX sector earnings, and cross-border supply chains. AI chip imports from Taiwan, plus shifts toward Mexico and Vietnam, add pressure. We review the setup for ^GSPC, policy risks around a Supreme Court challenge, and what the supply chain shift could mean for portfolios in Canada today.

S&P 500 checks tariff math as trade gap hits records

The US trade deficit rose to $901.5 billion in 2025, while the goods shortfall reached about $1.24 trillion. That came despite Trump tariffs, as imports outpaced exports and AI chip imports from Taiwan stayed strong. Trade also shifted toward Mexico and Vietnam. Coverage confirms the rise in the US trade deficit despite the policy push BBC and CNBC.

For Canada, a larger US trade deficit can mean more diversion, not less demand. We may see a supply chain shift that favors nearshoring to Mexico while Canadian auto and machinery exports compete on cost. Energy, fertilizer, and metals could benefit if US production needs reliable inputs. The loonie’s reaction ties to growth and risk appetite. Sector selection in Canada becomes key if Trump tariffs return.

With policy risk rising, ^GSPC trades near 6876.58, between a day low of 6836.33 and high of 6909.87. The 50-day average is 6894.63, and the 200-day is 6504.72. RSI is 48.17 and ADX is 17.55, showing no clear trend. Bollinger middle band sits at 6913.35. Money Flow Index at 30.42 signals cautious buying. Investors are weighing tariff costs versus earnings resilience.

Policy risk watch for investors

Investors are watching a Supreme Court challenge that could affect trade policy procedures and enforcement. A ruling that shifts agency power or tariff discretion could alter timelines, appeals, or implementation. Markets price uncertainty quickly, especially for multinationals with complex sourcing. For Canadians, policy clarity affects cross-border planning, contract terms, and how quickly firms adjust inventories and logistics.

Renewed Trump tariffs would likely raise input costs, pressure margins, and lift consumer prices in targeted categories. That can cool demand while headline inflation stays sticky. Sectors with global supply chains, such as autos, retail, and semiconductors, would feel it first. The US trade deficit might not fall if imports are rerouted. Markets will test earnings before trusting Trump tariffs to improve balances.

Canada’s exposure is tight in autos, industrial parts, agriculture, and tech services. If Trump tariffs return, some US buyers may switch suppliers within North America. Under CUSMA rules, content thresholds and rules of origin matter more. Canada can win share in components and energy, but bottlenecks and higher compliance costs could offset gains. A measured read on policy is essential.

Semiconductors, AI chip imports, and earnings risk

AI chip imports from Taiwan have been a key driver of the US import mix, even as Trump tariffs aimed to restrain deficits. Cloud spending and data center build-outs keep demand firm. If broader tariffs extend to related components, costs could rise and delivery schedules stretch. That risk flows into earnings guidance for chip buyers, equipment firms, and hyperscalers.

Tech, industrials, consumer goods, and logistics feel policy changes fastest. In Canada, AI research hubs and data center growth link earnings to US demand for chips, servers, and power gear. A supply chain shift can lift freight and warehousing volumes while raising compliance costs. For investors, watch pricing power, backlog quality, and lead times. Trump tariffs could widen dispersion within sectors.

We prefer balance over big bets. Pair quality US large caps with cash-flowing Canadian cyclicals. Consider diversified ETFs for semiconductors and industrials to spread policy risk. Keep some USD exposure as a shock absorber. If Trump tariffs return, emphasize firms with local sourcing, flexible contracts, and cost pass-through. Revisit allocations after earnings calls and updated guidance.

Technical picture and scenario map for ^GSPC

Short-term momentum is mixed. RSI sits at 48.17, MACD is -7.95 versus a 3.16 signal, and ADX at 17.55 shows no trend. Average True Range is 82.42, pointing to typical daily swings. Bollinger Bands span 6807.28 to 7019.42, with the middle at 6913.35. The setup argues for patience and tight risk controls while policy headlines on Trump tariffs develop.

Price is near 6876.58 with a recent range between 6836.33 and 6909.87. The 50-day average at 6894.63 and the 200-day at 6504.72 frame bias. Year high is 7002.28 and year low is 4835.04. A break below 6807.28 risks momentum selling, while a move above 6913.35 improves tone. Money Flow Index at 30.42 is supportive if buyers step in.

Our base case uses model marks: monthly 6561.14, quarterly 6718.03, and yearly 6994.31. Longer run paths point to 8190.18 in 3 years, 9384.46 in 5, and 10613.47 in 7, subject to earnings and policy. Stock Grade is C+ with a HOLD view. Outcomes depend on whether Trump tariffs lift costs more than margins can absorb.

Final Thoughts

The data show the US trade deficit at $901.5 billion and a record goods gap near $1.24 trillion, even with Trump tariffs in place. Markets are asking whether tariffs cut deficits or just shift them to new partners like Mexico and Vietnam. For Canadian investors, the near-term playbook is simple. Focus on pricing power, diversified supply, and clean balance sheets. Watch semiconductors and AI chip imports as leading indicators for capital spending. On ^GSPC, neutral momentum and contained trend strength argue for disciplined entries and exits around the 50-day and Bollinger mid-band. Policy headlines, a Supreme Court decision, and any tariff reset will likely drive the next leg. Stay flexible, keep risk tight, and reassess after earnings updates. This is informational only.

FAQs

Why did the US trade deficit rise despite Trump tariffs?

Imports outpaced exports in 2025, lifting the US trade deficit to $901.5 billion while the goods gap neared $1.24 trillion. AI chip imports from Taiwan remained strong, and trade redirected toward Mexico and Vietnam. Tariffs can raise costs but may not reduce total imports if demand persists. That dynamic weakens the case that Trump tariffs alone can shrink deficits.

How could renewed tariffs affect Canadian investors?

Renewed Trump tariffs could raise input costs, shift sourcing within North America, and widen performance gaps across sectors. Canada may gain share in components and energy but face higher compliance and logistics costs. Watch pricing power, backlog quality, and lead times. FX moves can buffer or amplify returns. Review allocations after company guidance and policy updates.

Which S&P 500 sectors look most exposed to tariff changes?

Sectors with global supply chains are most exposed: autos, retail, semiconductors, and selected industrials. Tariffs can lift costs, compress margins, and delay deliveries. Areas with strong pricing power or local sourcing often hold up better. Monitor companies’ pass-through, supplier mix, and inventory levels during earnings calls to gauge resilience under Trump tariffs.

What technical levels matter for ^GSPC right now?

Key references include the 50-day average at 6894.63, 200-day at 6504.72, Bollinger middle at 6913.35, and bands near 6807.28 and 7019.42. Price sits around 6876.58 with RSI at 48.17 and ADX at 17.55. Those signals show a neutral tone. A sustained move above the mid-band would improve momentum.

Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.