Trump's Tariffs Hit Markets, Natural Gas Spikes, Mexican Peso Hits 2-Year Lows, Bitcoin Freefalls: 'The Outlook Is Unclear,' Analysts Warn
A fresh wave of market turmoil hit global equities on Monday as President Donald Trump signed executive orders imposing new tariffs: 25% on imports from Mexico and Canada and 10% on imports from China.
The tariffs, set to take effect Tuesday, Feb. 4, include a 10% carve-out for Canadian gas, power, and minerals.
U.S. stock futures tumbled over 1% on Friday. That afternoon, as of 1:10 p.m. ET, S&P 500 futures were down 1.5%, slipping below 6,000 points. Nasdaq 100 futures declined 1.6% and Dow Jones Industrial Average futures sank over 1.2%.
“Both Canada and Mexico have threatened retaliation, and markets are concerned that this is the start of a global trade war,” said David Morrison, market analyst at Trade Nation.
Automakers Take A Hit Amid Trade Disruption, Energy Commodities Rise
The automotive sector bore the brunt of the tariff shock, with General Motors Co. (NYSE:GM) plunging 6% in premarket trading.
Ford Motor Co. (NYSE:F) and Stellantis N.V. (NYSE:STLA) also suffered losses, down 3.9% and 4.7%, respectively. Given the reliance of U.S. automakers on North American trade, the new tariffs could significantly disrupt supply chains and raise costs.
Within tech, shares of Nvidia Corp. (NASDAQ:NVDA) shrunk 4% to $115, eyeing the lowest levels since October.
The tariffs sent ripples through commodity markets. Henry Hub natural gas prices — as tracked by the U.S. Natural Gas Fund (NYSE:UNG) — soared 8.5%, surpassing $3 per million British thermal units, while crude oil climbed 2.2% to $74 per barrel.
Gold edged up 0.5% to $2,810 per ounce, reflecting heightened market uncertainty.
The U.S. dollar benchmark — as tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP) — surged across the board, with up 0.9%. The greenback gained 1% against the Canadian dollar and 1.5% against the Mexican peso, pushing USD/MXN to 21, levels not seen since February 2022.
Cryptocurrency markets were not immune to the selloff. Bitcoin (CRYPTO: BTC) slumped 2.8% to trade below $95,000, hitting an overnight low of $91,200 as investors moved toward safer assets.
Analyst Reactions: Uncertainty Looms Over Tariff Impact
S&P Global warned that U.S. tariffs on metals and minerals “are widely expected to ratchet up costs for U.S. manufacturers that depend on Canada, Mexico, and China for materials.”
Goldman Sachs’ economist Jan Hatzius highlighted that tariffs may be temporary, yet the outlook remains uncertain. “We think it is more likely that the tariffs will be temporary, but the outlook is unclear.”
He added that a sustained 25% tariff on Canadian and Mexican imports could raise core U.S. Personal Consumption Expenditure inflation by 0.7% and shave 0.4% off GDP growth.
“S&P 500 companies derive 28% of revenues outside the U.S. A 10% increase in the trade-weighted USD would reduce S&P 500 EPS by roughly 2%,” said Goldman Sachs’ analyst David J. Kostin.
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