• Stock futures plunged as Trump’s sweeping tariffs on Mexico, Canada, and China stoked fears of a trade war, with Dow futures dropping 616 points and S&P 500 futures down 1.6%.
  • Global markets reacted sharply, with European equities falling, cryptocurrencies sliding, and oil prices climbing due to supply concerns.
  • Sectors like automakers and consumer goods tied to imports faced heavy losses, while steelmakers saw gains amidst market volatility and increased uncertainty.

Stock futures plunged Monday morning, kicking off the new trading month with steep losses as President Donald Trump imposed sweeping tariffs on key U.S. trading partners. The move has stoked fears of a full-scale trade war that could disrupt global supply chains, spark inflation, and weigh heavily on the economy.

U.S. Stock Futures Plummet

Dow Jones Industrial Average futures sank 616 points, or 1.4%, while S&P 500 futures dropped 1.6%. Nasdaq-100 futures tumbled 1.8%, and small-cap Russell 2000 futures fell 2.2%. Meanwhile, the Cboe Volatility Index, Wall Street’s “fear gauge,” surged above 20, signaling heightened market risk.

The tariffs, which target imports from Mexico, Canada, and China, have rattled investor confidence. A 25% tariff now applies to goods from Mexico and Canada, while energy imports face a 10% levy. China’s imports have also been hit with a 10% tariff. In retaliation, Canada announced countermeasures, and Mexico is evaluating its response. China plans to file a formal complaint with the World Trade Organization.

Global Markets React

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The tariff escalation sent shockwaves through global markets. European equities dropped sharply, with Germany’s DAX index falling nearly 2%. Cryptocurrency markets also reeled, as Bitcoin slid to $95,000 from over $102,000 over the weekend, while Ether dropped 12%. The ICE U.S. Dollar Index rose 1%, reflecting a surge in the dollar’s value amid global uncertainty. Meanwhile, WTI crude oil prices climbed 2% as concerns about North American supply disruptions grew.

Sectors Hit Hardest

U.S. automakers, heavily reliant on North American supply chains, bore the brunt of the stock decline. General Motors shares fell 6.8%, while Ford dropped 4%. Auto parts suppliers like Aptiv and Avery Dennison lost 5% and 4%, respectively. Engine manufacturer Cummins also declined 3%.

Elsewhere, consumer goods companies tied to Mexican imports faced heavy losses. Constellation Brands, a major importer of Mexican alcohol, tumbled 5%. Chipotle shares, reliant on avocados from Mexico, fell 3%. Clothing giants Nike and Lululemon were down about 3% each.

However, steelmakers benefited from the tariffs, with shares of Nucor and Steel Dynamics gaining 4% each in premarket trading.

Analysts Predict Market Turbulence

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“Markets may now need to take Trump’s tariff agenda literally rather than seriously,” said Tobin Marcus, Wolfe Research’s head of U.S. policy and politics. “If investors begin pricing in this new level of uncertainty, we could see significant market volatility.”

The timing of the trade war adds to investor unease as the market faces a busy week. Over 120 companies in the S&P 500 are set to report earnings, including tech heavyweights Alphabet, Amazon, and Palantir. Consumer giants like Walt Disney and Mondelez will also release results. Additionally, the January nonfarm payrolls report, expected Friday, is forecasted to show 175,000 new jobs.

A Volatile Start to 2025

The new year has been marked by volatile markets. January saw investors grappling with policy shifts under a new White House administration and cracks in the artificial intelligence trade that fueled last year’s bull market. Despite a rocky finish to the month, the major indexes posted gains. The Dow added 4.7% in January, outpacing the S&P 500’s 2.7% rise and the Nasdaq’s 1.6% gain.

How will Trump’s tariffs shape the global economy and markets in the months ahead? Let us know in the comments below. If you found this article insightful, share it with your network and explore more analysis on The Dupree Report.

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