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The S&P 500 regained some of its losses from earlier in the day. Shares in Asian manufacturers and European carmakers tumbled on concern that tariffs will hurt trade and disrupt supply chains.
- Published Feb. 2, 2025Updated Feb. 3, 2025, 11:29 a.m. ET
President Trump’s decision to impose sweeping tariffs on some of America’s largest trading partners sent shock waves through markets across the globe on Monday.
The dollar strengthened, oil prices rose and major stock indexes in the United States fell at the start of trading on Monday, though the S&P 500 and the technology-heavy Nasdaq later regained some of their losses on the news that tariffs on goods from Mexico are poised to be delayed by a month. The indexes had fallen roughly 1 percent by late morning. Markets in Asia and Europe also tumbled.
When Mr. Trump was elected, many analysts and investors had brushed off his more aggressive tariff talk as bluster intended to prompt negotiation from his global counterparts. But over the weekend, the new administration followed through on the president’s promise to impose tariffs of 25 percent on imports from Canada and Mexico, the United States’ closest trading partners. Canadian energy products and goods from China will be levied at 10 percent. Tariffs on Canada and China are still set to go into effect on Tuesday.
The drop in the S&P 500 “seems broadly justified as tariff fears rise,” said Yung-Yu Ma, the chief investment strategist for BMO Wealth Management. “The uncertainty at this stage is tremendous — not only of how these eventual negotiations will play out, but worries about how this is only the tip of the iceberg and more tariffs are on the horizon.”
Shortly after Mr. Trump’s announcement this weekend, leaders in Canada and Mexico said they would respond by placing retaliatory tariffs on U.S. goods. The peso and Canadian dollar both initially declined against the U.S. dollar. They both later recovered sharply after Mexico’s president, Claudia Sheinbaum, said she had struck a deal with President Trump to delay the tariffs on Mexican goods.
Asian and European stock markets also slid on Monday. Japan’s Nikkei 225 index and South Korea’s Kospi each fell more than 2.5 percent. Markets in mainland China were closed on Monday for the Lunar New Year holiday. The Euro Stoxx 50, made up of Europe’s largest companies, dropped 1.6 percent.
