The trade war has arrived and stocks are taking it badly. U.S. stock futures were tumbling in sympathy with global markets as investors reckon with the imposition of new U.S. tariffs against Mexico, Canada and China.
Dow Jones Industrial Average futures were falling 617 points, or 1.4%. S&P 500 futures were dropping 1.6% and Nasdaq 100 futures were down 1.9%.
The White House on Saturday announced a wave of tariffs against Mexico, Canada, and China. Effective Tuesday, the U.S. will impose a 25% levy on imports from Mexico and Canada, a 10% tariff on energy products from Canada, and an additional 10% tariff on China.
The speed of the move appears to be undercutting hopes that President Donald Trump would use tariffs largely as a tool for negotiation. The levies have already triggered threats of retaliation, while President Donald Trump has also talked of his intention to place tariffs on goods imported from the European Union.
“Almost half of everything the US imports will be affected by higher tariffs, potentially disrupting supply chains and impacting the US, Canadian, and Mexican economies significantly,” wrote ING economist Inga Fechner in a research note. “Industries like automotive and manufacturing, which are deeply integrated with US supply chains, will face increased costs and disruptions, since many parts cross the border multiple times before becoming final product.”
The price of crude oil was rising, with Brent–the international standard– gaining 1.3% to $76.65 a barrel while WTI–the U.S. standard– rose 1.3% to $71.72 a barrel.
The yield on the benchmark 10-year U.S. Treasury note stood at 4.552% early on Monday, ticking up from the previous week.
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