U.S. Stock Futures Nosedive on Monday as Trump's Tariffs Hit the Markets
U.S. stock futures plunged sharply on Monday, signaling a steep decline for the major indexes as investors grappled with the impact of President Donald Trump's announced tariffs on China, Mexico, and Canada.
Nasdaq 100 futures (NQ=F) led the decline, diving 1.7%. S&P 500 futures (ES=F) spiraled 1.5%, while futures linked to the Dow Jones Industrial Average (YM=F) tumbled 1.3%, or approximately 580 points.
The tariffs, which take effect on Tuesday, will impose 25% duties on Canada and Mexico, and 10% on China. Energy imports from Canada will face a reduced duty of 10%. Trump has also indicated that tariffs on Europe are "definitely happening," but provided no further details.
Meanwhile, European stock markets (^STOXX) opened lower on Monday. The U.S. dollar index (DX-Y.NYB, DX=F) rose to near its highest levels in two years.
In contrast, West Texas Intermediate crude futures (CL=F) surged by over 2%, outpacing the 1.6% gain for the international benchmark Brent (BZ=F).
Investors remain focused on retaliatory measures from Canada and Mexico, which swiftly announced tariffs on a range of U.S. goods. Prime Minister Justin Trudeau stated that Canada will impose 25% counter-tariffs on approximately $107 billion worth of American-made products.
Analysts caution that the trade war is creating "considerable uncertainty" about the Trump administration's economic agenda. This uncertainty has prompted the Fed to delay raising interest rates, fearing an inflation rise.
Industries such as automobiles, auto parts, gas and oil, clothing, computers, whiskey, and avocados are expected to experience price increases due to the tariffs.
Analysts highlight that carmakers are likely to be among the most significantly impacted by the tariffs, given their reliance on cross-border trade. Footwear and clothing retailers are also expected to face challenges.
Wall Street analysts overwhelmingly view the tariffs negatively, citing their detrimental effects on both the economy and markets. Goldman Sachs strategist David Kostin warns that sustained tariffs could reduce his S&P 500 earnings growth forecast by 2% to 3%.
Asian markets opened lower on Monday, with the MSCI Asia Pacific Index falling over 2%. Hong Kong-listed Chinese tech stocks provided some resilience. European stocks also experienced a sharp decline, with automakers leading the sell-off.
The announcement of sweeping tariffs on various imports, including crude from Canada and Mexico, has driven up oil prices. West Texas Intermediate (CL=F) futures hit a high of $75.18 a barrel, while Brent crude (BZ=F) reached around $76.