The U.S. stock market experienced significant fluctuations on Monday. This came after President Trump signaled a delay in implementing parts of his proposed global trade war. Major stock indices initially plunged during early trading.
However, they managed to recover some ground by midday. The Dow Jones Industrial Average was trading down about 150 points, or 0.3%. The tech-heavy Nasdaq fell 1.2%.
The broader S&P 500 index declined 0.8%. Over the weekend, President Trump announced new tariffs on several of the United States’ largest trading partners. Starting Tuesday, imports from Canada and Mexico were set to face 25% duties.
Imports from China would incur 10% tariffs. Energy imports from Canada were set to face a lower 10% duty. However, by Monday morning, Trump announced a one-month pause on the tariffs for Mexican goods.
This followed a phone call with Mexican President Claudia Sheinbaum. He described the discussion with Sheinbaum as “very friendly” on his Truth Social network. He added that his administration would continue negotiations with Mexico.
Markets react to Trump’s tariff delay
The goal is to achieve a more favorable trade deal between the two countries. The executive action over the weekend ignited a wave of concern across global markets.
Economists from global bank BNP Paribas noted in a client briefing prior to Trump’s tariff pause that the announced tariffs were more significant and implemented faster than expected. They warned that the tariffs could hinder economic growth. They could also lead to a sharp rise in U.S. consumer prices in the coming months.
Investors in some American automakers seemed to respond positively to the news of the Mexican tariff reprieve. Shares in General Motors and Ford were each down about 1% by midday, improving from earlier losses. Tesla, however, remained down more than 4%.
Automakers operate complex supply chains between the U.S., Canada, and Mexico. They often manufacture in Mexico or Canada before importing vehicles to the U.S.
The President’s tariff threats also unsettled European markets. The pan-European STOXX 600 index fell 1%.
Germany’s DAX declined 2%. The FTSE 100 index, tracking the hundred largest companies listed in London, was down 1%. On Sunday night, President Trump confirmed that new tariffs on the European Union would “definitely happen”.
However, he suggested a potentially softer stance on the U.K., citing a good relationship with Prime Minister Keir Starmer. He indicated the U.K. “might” still face trade penalties.
