“Wall Street on Edge: Trump’s Tariffs Shake Up Markets!”
Global markets braced for turmoil on Monday after former President Donald Trump imposed sweeping tariffs on Canada, Mexico, and China—fueling fears of slowed economic growth and rising inflation.
U.S. stock futures tumbled in early Asian trading, with Nasdaq futures down 2.35% and S&P 500 futures dropping 1.8%. In response, Canadian Prime Minister Justin Trudeau announced retaliatory tariffs set to take effect Tuesday, while Mexico’s President Claudia Sheinbaum promised details of Mexico’s countermeasures soon. China also vowed to hit back, with Trump warning Americans to expect “some pain.”
Oil prices surged by more than $2, and gasoline futures jumped over 3% as markets grappled with uncertainty. The lack of details on Trump’s tariff plan left investors anxious, especially after China’s DeepSeek AI model rattled tech stocks last week.
The economic fallout could mean lower corporate profits, higher inflation, and a hit to rate-cut expectations—potentially weakening the Canadian dollar and China’s yuan.
With uncertainty at an all-time high, investors are watching closely for last-minute negotiations that could soften the blow.
Markets Shaken as Trump Slaps Tariffs on Canada, Mexico, and China
In a sweeping move, former President Donald Trump signed three executive orders imposing 25% tariffs on most Canadian and Mexican imports and 10% on Chinese goods, set to take effect Tuesday.
Retaliation & Market Fallout
Canada fired back with 25% tariffs on $155 billion worth of U.S. goods, with $30 billion kicking in immediately and the rest following in 21 days. Mexico and China also vowed countermeasures, sending shockwaves through currency markets. The offshore yuan hit a record low of 7.3765, while the U.S. dollar surged to a 20-year high against the Canadian dollar and gained over 2% against the Mexican peso. JPMorgan estimates Mexico’s currency could slide nearly 12% if the tariffs hold.
Stocks & Inflation Concerns
Analysts brace for a potential stock selloff, with Morgan Stanley warning that equities could take a hit, though the impact may vary by sector. Evercore ISI strategists predict the S&P 500 could swing 3-5% in either direction in the short term. Barclays estimated the tariffs could slash S&P 500 company earnings by 2.8%.
The tariffs also threaten to fuel inflation, with Goldman Sachs forecasting a 0.7% rise in core inflation and a 0.4% hit to U.S. GDP if Canada and Mexico face across-the-board tariffs. The European Central Bank’s Klaas Knot warned that higher inflation could push U.S. interest rates up, potentially weakening the euro.
Fed Rate Cuts in Doubt
With inflation concerns mounting, the Federal Reserve may rethink its rate-cut plans. The Fed recently paused its cycle, with Chair Jerome Powell stating they are “waiting to see what policies are enacted.” Capital Economics’ Paul Ashworth cautioned that if tariffs drive inflation higher, the Fed’s window for cuts in the next 12-18 months “just slammed shut.”
As uncertainty looms, investors are bracing for more market volatility in the days ahead.
This article originally appeared on USA TODAY: Wall Street braces for market impact after Trump tariffs