Shares Tumble Amidst Global Trade War Fears
Automakers and tech giants witnessed significant declines on Monday due to President Trump's announcement of sweeping tariffs against Mexico, Canada, and China. Fears of a global trade war emerged, raising concerns about its impact on economic growth.
Investors sought refuge in the dollar and U.S. Treasuries, as Mexico and Canada vowed retaliation. China, the top third U.S. trading partner, plans to challenge the tariffs at the World Trade Organization.
In the automotive sector, General Motors plunged 6.4%, Ford lost 3.8%, and Tesla shed 2.9% in premarket trading. E-commerce companies PDD Holdings and Alibaba saw losses of 4.5% and 1.9%, respectively.
Major tech stocks also declined, with Microsoft dropping 1.5%, Apple losing 1.9%, and Amazon falling 2.3%. Russell futures recorded a 2.2% slump, indicating significant setbacks for domestic-focused stocks.
"These tariffs disrupt established supply chains and dampen North American business sentiment," said J.P.Morgan's chief economist Bruce Kasman.
Trump acknowledged the potential cost of tariffs on consumers and mentioned they could cause a short-term disruption. Additionally, he hinted at "very substantial" tariffs on the European Union.
Cryptocurrencies experienced a downturn, with Coinbase losing 5.8% and miners Marathon Digital and Riot Platforms falling around 6% each. Investors' preference for safer investments pushed Bitcoin below the $100,000 mark.
"Trump's actions challenge our belief that his administration will prioritize business support while reducing global engagement," Kasman noted. "The policy mix could inadvertently shift toward a less business-friendly stance."