The U.S. stock market experienced volatility on Monday as President Trump announced a delay in part of his global trade war. Major stock indices initially plunged but managed to recover some losses by midday. The Dow Jones Industrial Average was down about 150 points, or 0.3%, during Monday’s trading session.
The tech-heavy Nasdaq dropped 1.2%, while the broader S&P 500 index fell 0.8%. This came after President Trump announced new tariffs on imports from several of the United States’ largest trading partners. Starting Tuesday, imports from Canada and Mexico were to face a 25% duty and those from China a 10% duty.
Energy imports from Canada were to be subject to a lower 10% duty. However, following a phone call with Mexican President Claudia Sheinbaum, Trump announced a one-month pause on the tariffs on Mexican goods. He described the conversation with Sheinbaum as “very friendly” on his Truth Social network and stated that negotiations would continue in an effort to achieve a deal.
Tariff delay impacts global markets
The weekend’s executive action caused fear in global markets. Before the announcement of the pause, economists from BNP Paribas noted that the increase in tariffs was larger and faster than anticipated.
They warned that the tariffs could slow economic growth and sharply increase U.S. consumer prices over the coming months. Investors in some American automakers seemed to react positively to the news of the Mexican tariff reprieve. Shares in General Motors and Ford were each down about 1% by midday, recovering some ground from earlier losses.
However, Tesla shares were still down more than 4%. The automotive industry relies on a complex supply chain network between the U.S., Canada, and Mexico, with many manufacturers producing cars in Mexico or Canada before exporting them to the U.S.
President Trump’s tariff threats also impacted European markets. The pan-European STOXX 600 index fell 1% on Monday, Germany’s DAX dropped 2%, and the FTSE 100 index, which tracks the hundred largest companies listed in London, was down 1%.
On Sunday night, Trump confirmed that new tariffs on the European Union would “definitely happen” but suggested a potentially softer stance on the U.K., citing a good relationship with Prime Minister Keir Starmer, though he noted that the U.K. “might” still face penalties.
