US stock futures fall as Trump’s tariffs threaten a dangerous trade war
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US stock futures slid Tuesday after President Donald Trump made good on his threat to levy hefty tariffs on Canada and Mexico. Dow futures dropped by around 150 points in premarket trading, and futures tied to the S&P 500 and Nasdaq 100 were both around 0.7% lower.
The 25% tariff on goods imported from the US’s closest trading partners comes after Trump also imposed an additional 10% tariff on Chinese goods, raising that country’s rate to 20%.
The broad-based levies are intended to stem the flow of fentanyl into the United States, the Trump administration said.
However, the impact of tariffs on everyday goods for Americans could stall the economic engine that drives US growth. Inflation-weary consumers are already starting to rein in their spending as uncertainty ripples through households. Layoffs are rising, consumer confidence has plunged, and inflation is still above the Federal Reserve’s target of 2%.
China immediately struck back Tuesday, announcing tariffs on chicken, pork, beef and some agricultural imports from the US, according to a statement from the State Council Tariff Commission. Canada’s Prime Minister Justin Trudeau said hours before the tariffs took effect that Ottawa would immediately respond with tariffs on billions of dollars of US goods.
While Trump has long signaled his intent to impose stringent levies on America’s trading partners, many investors believed the threat of tariffs was a negotiation strategy. But as the deadline neared, fear rose that Trump’s actions would spark a trade war.
That triggered a massive selloff on Wall Street on Monday: The Dow ended the day down by 650 points, the S&P had its worst day since December and the Nasdaq Composite flirted with correction territory.
“While Tuesday’s tariffs are a go, it remains very unclear on just how long these tariffs will remain,” wrote Clark Geranen, chief market strategist at CalBay Investments, in a note Tuesday. “We tend to believe these are more of a negotiation tactic and not the start of a long and drawn out reciprocal trade war. Still, in these situations, investors sell first and ask questions later, as seen during Monday’s selloff.”
Trump is scheduled later Tuesday to deliver to Congress the first address of his second term. The theme of that speech, “Renewal of the American Dream,” comes as the stock market has now erased all gains since he became president and the Federal Reserve Bank of Atlanta’s real-time GDP forecast projects the economy could contract by 2.8%.
This is a developing story and will be updated.
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US stock futures slid on Tuesday as investors weighed Canada and China’s response to President Donald Trump’s delivery of new tariffs, amid nerves over the prospect of a deepening trade war.
Dow Jones Industrial Average futures (YM=F) fell 0.3%, while S&P 500 futures (ES=F) dropped 0.5%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) shed 0.6%, as all three indexes took a leg lower.
Rising fears of a full-on trade war drove a sell-off in stocks on Monday after the president said there was “no room left” for Canada or Mexico to strike a deal to mitigate promised tariffs.
Stocks are retreating as markets assess the likely impact of Trump’s broad tariffs on America’s top trading partners. The measures — fresh 25% tariffs on Canada and Mexico, and a doubling in China duties to 20% — were signed into effect at midnight ET on Tuesday.
Canada hit back with a sweeping package of immediate tariffs on US imports, while China retaliated with additional 15% duties on US farm products such as chicken and pork, to come on March 10. Many saw Beijing’s response as less aggressive than feared, leaving room for negotiation with Trump.
Target (TGT) warned that tariffs will put pressure on first quarter profit as it delivered an earnings beat before the bell. The retail giant’s stock was little changed in early trading. Meanwhile, its sector peer Best Buy (BBY) put out a muted annual sales forecast alongside its own quarterly beat. The additional sign of consumer caution helped send its shares lower.
US Treasury Secretary Scott Bessent argued that a market sell-off in response to new tariffs would be temporary, Bloomberg reports, though he acknowledged there may be a transition period as new duties on Canada, Mexico, and China take effect.
The Treasury Secretary’s comments come after stocks plummeted Monday in response to the tariffs. On Tuesday morning, futures for Dow Jones Industrial Average futures (YM=F) fell 0.3%, while S&P 500 futures (ES=F) dropped 0.8%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) shed nearly 1%.
Bloomberg reports:
US Treasury Secretary Scott Bessent projected confidence in President Donald Trump’s expansive plans to tariff foreign nations even as the stock market slumped in reaction to the first round of levies on Canada and Mexico.
“Over the medium term, which is what we’re focused on, it’s a focus on Main Street. Wall Street’s done great, Wall Street can continue to do fine, but we have a focus on small business and consumers,” Bessent said on Fox News’s Fox & Friends Tuesday. “So we are going to rebalance the economy.”
Read more here.
The risk to global growth from Trump’s tariffs is rattling bond investors, who appear increasingly convinced that the president is no longer just making threats as a precursor to a deal.
Traders also ramped up bets on the Federal Reserve making more interest-rate cuts than previously expected.
Bloomberg reports:
The US yield curve steepened in jittery markets as weeks of tariff threats from President Donald Trump came to fruition, fueling concerns about the impact on global growth.
Rates on 30-year Treasuries (^TYX) rose one basis point as of 12:19 p.m. in London, as yields on shorter-maturity securities fell five basis points, following the imposition of levies on Canada, Mexico and China. Traders added to bets on US interest-rate cuts, fully pricing three more quarter-point reductions this year.
Yield curves also steepened in Europe, with rates on two-year German bunds falling five basis points to 2.02%. Traders amped wagers on easing from the European Central Bank on concern that the euro area will be next to face levies, while an aggressive ramp up in EU defense spending pinned the spotlight on growing government deficits.
“We see structurally steeper curves,” said Mohit Kumar, chief economist and strategist for Europe at Jefferies, who favors this trade in the UK and Germany. “Our view remains that tariffs are not an inflation story but a growth story.”
Read more here.
Shares of Okta jumped in premarket trading Tuesday after the identity and cybersecurity company reported solid sales, earnings, and 2025 profit guidance.
All three metrics beat Wall Street analysts’ estimates as the company benefitted from increased corporate spending on cybersecurity protection amid the AI boom.
Okta stock rose 14% Tuesday morning and was a trending ticker on Yahoo Finance.
“This is a blowout quarter,” Okta co-founder and CEO Todd McKinnon told Yahoo Finance’s Brian Sozzi in an Opening Bid podcast exclusive. “It’s reflective of big deals in the quarter,” McKinnon said, pointing to a 25% surge in subscription backlog to more than $4 billion.
Read more here.
Target’s (TGT) earnings just hit the wires.
And while the earnings beat will quickly grab your eyes, it’s more important to lock in on this line from the release given all the risk around tariffs:
“In light of ongoing consumer uncertainty and a small decline in February net sales, combined with tariff uncertainty and the expected timing of certain costs within the fiscal year, the company expects to see meaningful year-over-year profit pressure in its first quarter relative to the remainder of the year,” Target said.
Target declined to share specific first quarter earnings guidance. Yahoo Finance data shows Wall Street analysts were looking for a slight first quarter year-on-year earnings improvement.
Economic data: No notable economic data expected.
Earnings: Target (TGT), Best Buy (BBY), AutoZone (AZO), On Holding (ONON), CrowdStrike (CRWD), Nordstrom (JWN), Ross Stores (ROST)
Here are some of the biggest stories you may have missed overnight and early this morning:
Trump pulls trigger on threatened tariffs that could recoil on US
Canada hits back with sweeping tariffs on $107B of US products
Trump 2.0’s agenda is hitting the economy at a fragile moment
China puts extra tariffs of up to 15% on major US farm imports
GOP lawmakers turn up the heat on the Fed over dual mandate
Tesla’s EV sales in China fall 49% in February
China leaves door open for talks with measured tariff response
Why tariffs ‘aren’t the problem’ in the stock market: Veteran
China’s tit-for-tat move to Trump was to slap tariffs of up to 15% on US farm goods such as pork and beef, starting next week. That’s going down generally well on Wall Street, which sees the targeted action as designed to avoid escalating a trade war between the world’s top two economies.
Bloomberg reports:
The Chinese response throws the ball back into the US court, with Trump’s review of Beijing’s compliance with the first trade agreement due in April adding to the urgency for negotiation. While Trump signaled a desire to speak with President Xi Jinping early last month, they have yet to have a call since the US leader took office.
“So far, China has given a measured, proportional response as they do not want to further escalate the situation,” said Henry Gao, a law professor at Singapore Management University who researches Chinese trade policies. “Once the April measures are out, that’s when China will likely negotiate with the US.”
The latest trade salvos came a day before Xi heads into the government’s biggest political meeting of this year, where his lieutenants will unveil their economic blueprint for 2025.
“I think the two most important reaction measures are still yet to come: the PBOC’s currency response and the fiscal package to be announced at the National People’s Congress,” said Christopher Beddor, deputy China research director at Gavekal Dragonomics in Hong Kong.
Read more here.
US President Donald Trump’s plan for wide-ranging tariffs against Canada and Mexico has occurred with no further delays.
Yahoo Finance’s Ben Werschkul reports:
A second round of tariffs from Donald Trump starts today with new duties on America’s top three trading partners: Canada, China, and Mexico.
There is “no room left for Canada or for Mexico,” Trump reiterated Monday afternoon at the White House, saying he wouldn’t pare back his tariffs levels on those two countries.
“They’re all set,” he added.
The president is imposing 25% duties on Canadian and Mexican imports following a 30-day pause. He is also implementing a second round of 10% duties on Chinese imports to increase the blanket tariffs on that nation to 20%.
The president signed an action on Monday afternoon with the new duties against China in an order that charged the country “has not taken adequate steps to alleviate the illicit drug crisis.” The duties on Canada and Mexico required no action this week as Trump’s previously signed order — with a March 4 deadline — simply went in into effect.
Read more here.
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In This Article:
Treasury Secretary Bessent shrugs off tariff sell-off, says Wall Street isn’t the focus
US yield curve gets steeper as tariffs put growth at risk
Okta stock jumps on ‘blowout quarter’
Ignore the Target earnings beat
Good morning. Here’s what’s happening today.
Xi leaves door open for talks with Trump
President Donald Trump’s tariffs take effect
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