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US stocks fell on Monday in reaction to the Trump administration’s scheduled tariff rollout against Canada and China, though the major averages pared heavier losses after President Donald Trump said the US would delay duties on Mexican imports by a month.
The tech-heavy Nasdaq Composite (^IXIC) closed down 1.2%, recouping a chunk of its earlier losses. Meanwhile, the S&P 500 (^GSPC) fell roughly 0.7%, and the Dow Jones Industrial Average (^DJI) fell 0.3%.
Consumer discretionary (XLY) stocks, which includes automakers, were hit over fears of tariff impacts. Tech (XLK) also lagged as shares of AI chip giant Nvidia (NVDA), iPhone maker Apple (AAPL) and EV manufacturer Tesla (TSLA) all fell over 2.5%.
The tariffs, initially set to take effect on Tuesday, include 25% duties on Canada and Mexico, and 10% on China. Energy imports from Canada will carry a lower 10% duty.
Following a Monday morning call with Mexico’s president Claudia Sheinbaum, Trump announced tariffs against Mexico would be delayed by a month after Sheinbaum agreed to send soldiers to the countries’ border to stop the flow of fentanyl and illegal migrants into the US.
Investors were hoping a similar deal would be announced at the 11th hour as President Trump and Prime Minister Justin Trudeau held a phone call on Monday afternoon.
Trump’s tariff announcement over the weekend initially sparked retaliatory statements, as Trudeau said his country will place 25% counter-tariffs on around $107 billion in American-made products.
The US dollar index (DX-Y.NYB, DX=F) took a leg lower, having earlier surged to trade near its highest levels in two years. On the oil front, West Texas Intermediate futures (CL=F) pared gains after jumping well over 2%.
LIVE 25 updates
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Stocks end off session lows as Trump pauses tariffs on Mexico
Stocks closed off the lows of the session on Monday after the US paused 25% tariffs on imported goods from Mexico, but duties on Canada and China were still scheduled to go into effect on Tuesday.
The tech-heavy Nasdaq Composite (^IXIC) fell 1.2% while the S&P 500 (^GSPC) dropped 0.7%. The Dow Jones Industrial Average (^DJI) erased early session losses to close down almost 0.3%.
Defensive stocks outperformed while Tech (XLK) and Consumer Discretionary (XLY) fell.
Investors were on the edge of their seats as President Trump and Canadian Prime Minister Justin Trudeau held a phone call on Monday afternoon. 25% tariffs on imports from Canada are scheduled to begin on Tuesday.
On Monday morning, Trump said the US would pause tariffs against Mexico after speaking with Mexican President Claudia Sheinbaum. Trump said she agreed to send 10,000 soldiers to the US border to stop the flow of fentanyl and illegal migrants coming into the country.
Over the weekend, the Trump administration also announced 10% tariffs on Chinese goods.
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Auto stocks slip on fears Trump tariffs will harm industry
Yahoo Finance’s Pras Subramanian reports:
Automaker stocks slipped on Monday following President Trump’s imposition of tariffs on goods coming from Canada and Mexico.
The tariffs, set to take effect on Tuesday, will include 25% duties on Canada, while Mexican President Claudia Sheinbaum and Trump said 25% tariffs on Mexico would be delayed until March. Trump’s tariff plan also includes 10% duties on China, with the president claiming tariffs on Europe will “definitely happen” but giving no further detail.
Big three automakers GM (GM), Ford (F), and Stellantis (STLA), as well as rivals Toyota and Honda, slipped on Monday but pared losses following the Mexico tariff delay. Even Tesla, despite not making any cars in Canada or Mexico, saw its stock fall, likely due to the fact it uses parts from those regions for its cars.
Read more here.
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Housing stocks down more than broader market as investors digest tariffs news
Major homebuilder stocks were down more than the broader market Monday afternoon as equities pared losses on news that President Trump will delay tariffs on Mexico by a month.
Shares of Toll Brothers (TOL), DR Horton (DHI), and Lennar Corporation (LEN) were down around 3% compared to the S&P’s decline of under 1%.
The homebuilding industry expects tariffs on Canada and Mexico to push up construction costs. Chairman of the National Association of Home Builders (NAHB) Carl Harris said in a statement after Trump imposed duties over the weekend that “consumers end up paying for the tariffs in the form of higher home prices.”
“NAHB urges the administration to reconsider this action on tariffs and we will continue to work with policymakers to eliminate barriers that make housing more costly and prevent builders from boosting housing production,” he said.
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Trump says new US sovereign wealth fund could play role in TikTok rescue
Yahoo Finance’s Alexis Keenan reports:
Donald Trump on Monday said that a newly created US sovereign wealth fund could play a part in his attempt to rescue TikTok from a US ban.
The president had previously floated the idea of the US taking a 50% stake in the social media platform as part of any deal negotiated with TikTok’s Chinese parent ByteDance, which has to divest itself of TikTok for it to escape a US ban.
On Monday, as he signed an executive order directing the US Treasury and Commerce departments to launch a new sovereign wealth fund, he said of TikTok that “we might put that in the sovereign wealth fund, whatever we make or we do a partnership with very wealthy people, a lot of options,” according to a report from the Associated Press.
“We have a lot of other things that we could put in the fund,” he added.
Read more here.
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Mexico, Canada tariffs could quickly change the cost of your grocery trip in the months to come
Yahoo Finance’s Brooke DiPalma reports:
Your next grocery bill might have some surprises.
On Saturday, President Trump signed an executive order to impose 25% tariffs on Canada and Mexico and 10% on China over issues of fentanyl and illegal migration, as reported by Yahoo Finance’s Ben Werschkul. Duties on all three countries will be implemented by Tuesday, Feb. 4, but tariffs on Mexico, as of now, will be paused until March.
Mexico and Canada are two of the US’s largest suppliers of agricultural products and accounted for $45.4 billion and $40.1 billion, respectively, in 2023, per the USDA.
This could mean higher prices for everyday goods such as tomatoes and avocados as well as beer and liquor from Mexico, spelling challenges for companies like Constellation Brands (STZ). Meanwhile, top imports from Canada include grains and potatoes.
Read more here.
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Defensive sectors outperform amid market jitters over tariffs
Defensive sectors outperformed on Monday as investors flocked to safe haven corners of the market amid tariff uncertainty.
Healthcare (XLV), Energy (XLE), and Consumer Staples (XLP) rose as the major averages cut early trading losses after President Trump said he would delay tariffs against Mexico by a month.
As of early afternoon trading, duties on imports from Canada and China are set to start on Tuesday, Feb. 4.
Consumer Discretionary (XLY), which houses the automakers exposed to 25% tariffs on imports from Canada, felt the brunt of the market pain on Monday.
Tech (XLK) also declined as shares of Apple (AAPL) and Nvidia (NVDA) sold off.
Meanwhile, social media platform Meta (META) jumped 2%, helping lift Communications Services (XLC).
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Gold touches all-time high as investors flock to safe haven amid tariff war
Gold (GC=F) touched new highs on Monday as investors flocked to the safe haven as US tariffs against China and Canada were set to start on Tuesday.
The yellow precious metal touched an all-time high of $2,872 per ounce before paring gains to hover near $2,860 by afternoon trading.
Gold has risen in recent sessions despite a jump in the US dollar amid worries over an escalating trade war. Over the weekend the Trump administration announced tariffs against Mexico, Canada, and China.
However, on Monday morning Trump confirmed levies on imported goods from Mexico would be delayed by a month after Mexico’s president agreed to send 10,000 Mexican soldiers to the border in order to stop the entry of fentanyl and illegal migrants into the US.
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Apple, Tesla shares lead tech lower as companies exposed to China feel brunt of tariff anxiety
Shares of iPhone maker Apple (AAPL) and EV giant Tesla (TSLA) dragged on the tech-heavy Nasdaq (^IXIC) as planned tariffs against Canada and China prompted a sell-off in companies exposed to the Chinese market over worries of a trade war.
Apple fell more than 4% while Tesla dropped 6%, sending the Nasdaq down 1.2%. AI chipmaker Nvidia (NVDA) also fell more than 3% as chip stocks were rattled over President Trump’s tariff announcement over the weekend.
The Nasdaq pared early session losses after President Trump confirmed he would delay 25% tariffs against Mexico by a month.
Duties of 25% against Canadian imports and 10% against Chinese goods were still set to go into effect on Tuesday. Trump was expected to speak with Canada’s Prime Minister Justin Trudeau later in the day.
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Tariffs ‘likely about leverage’ as Wall Street debates their staying power
President Trump confirmed Monday that the US had delayed implementing tariffs on Mexico by one month — less than 24 hours before the levies were set to go into effect.
The development comes as Wall Street economists debate whether Trump’s proposed 25% tariff threats on Mexico and Canada will last or even happen, as many now anticipate a similar agreement to be struck between the US and Canada.
“The Canada/Mexico tariffs are likely about leverage,” Claudio Irigoyen, lead global economist at Bank of America, wrote in a note to clients on Monday.
“Our view continues to be that temporary tariffs and threats of tariffs on Canada and to Mexico will last until [a new US, Canada, and Mexico trade agreement] is renegotiated,” Irigoyen said, noting that a trade agreement is due for review in 2026.
“News reports suggest that President Trump aims to do the review sooner,” he said. “In our view, the tariffs against Canada and Mexico are aimed at increasing the US’s leverage in these negotiations.”
Others on Wall Street have echoed similar sentiments.
“While the outlook is unclear, we think the Canada- and Mexico-focused tariffs are likely to be short-lived,” wrote Jan Hatzius, economist at Goldman Sachs. “We think it is more likely that the tariffs will be temporary.”
Tom Lee, head of equity research at Fundstrat, argued in a note early Monday that markets are likely overreacting to the noise, especially given the possibility of a greater upside to resolving the conflict.
To that point, stocks did bounce off session lows following the Mexico news.
“Trump is imposing tariffs to stop the flow of drugs and illegal aliens, different than the trade war of 2018,” Lee said, arguing that lifting these sanctions “arguably is more flexible. Because this requires the other nations to cooperate on these objectives. To me this is a reason we expect the markets to be less panicked about this.”
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Bitcoin cuts losses to hover above $98,000 after US delays tariffs against Mexico
Bitcoin (BTC-USD) tumbled pared losses to hover above $98,000 per token after President Trump said he would delay tariffs against Mexico by a month.
The word’s largest cryptocurrency erased losses of as much as 4% sparked by US tariffs announced over the weekend against Mexico, Canada, and China.
The world’s largest cryptocurrency pared declines along with the rest of the broader market after Trump confirmed he spoke to Mexican President Claudia Sheinbaum and she agreed to send soldiers to the US border to stop the flow of fentanyl and illegal migrants.
Trump said the US agreed to pause the tariffs, which were initially planned to start on Tuesday, by a month.
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Markets come off session lows after US delays tariffs against Mexico by a month
The major averages came off session lows after President Trump confirmed the US will delay tariffs against Mexico by a month.
The tech-heavy Nasdaq Composite (^IXIC) pared losses by about half to drop 1% while the S&P 500 (^GSPC) fell 0.7%. The Dow Jones Industrial Average (^DJI) erased early session losses to fall more than 150 points.
President Trump said he spoke to President Claudia Sheinbaum of Mexico and she agreed to send 10,000 soldiers to the US border to stop the flow of fentanyl and illegal migrants coming into the country.
“We further agreed to immediately pause the anticipated tariffs for a one month period during which we will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico,” wrote Trump on Truth Social.
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Economic activity in manufacturing expands for first time in over 2 years
In January, economic activity in the US manufacturing sector expanded for the first time in more than two years.
The Institute for Supply Management’s manufacturing PMI indicated the manufacturing sector moved into expansion after 26 months of contraction.
The ISM’s manufacturing PMI registered a reading of 50.9 in January, up from December’s reading of 49.3 and higher than the 50 economists expected, according to Bloomberg data.
Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate a contraction.
Also out on Monday, the final reading of S&P Global’s manufacturing PMI hit a reading of 51.2 in January, above the 49.4 seen in December.
“A new year and a new President has brought new optimism in the US manufacturing sector,” S&P Global Market Intelligence chief business economist Chris Williamson said in the release. “Business confidence about prospects for the year ahead has leaped to the highest for nearly three years after one of the largest monthly gains yet recorded by the survey.”
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Market sell-off shows investors were ‘underpricing’ Trump’s promised tariffs
Investors didn’t take President Donald Trump at his word, and now markets are selling off in reaction to his move to impose hefty tariffs on Canada, Mexico, and China.
“While we have not had tariffs baked into our own US equity market outlook, we have been concerned that many financial market participants have been underpricing the risk that they were more than a negotiation tool,” RBC Capital Markets head of US equity strategy Lori Calvasina wrote in a note to clients on Sunday.
Even betting markets, which many believe were a leading indicator during the recent presidential election, weren’t pricing in high chances of tariffs. As of Wednesday last week, popular online betting offering Polymarket was pricing in just 20% odds that Trump would impose 25% tariffs on Canada and Mexico.
Now, it appears the market consensus was offside, and investors are facing a repricing of potential risks. The US dollar has shot up to 109, near its highest level in two years. Retail and auto stocks, leading contenders to be impacted by tariffs, also sold off.
“Full implemented tariffs with staying power don’t appear to be in the price of key markets,” a team of Morgan Stanley equity strategists and economists wrote on Sunday.
They added, “US equities may come under pressure, and services should outperform consumer goods.”
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Stocks tank as trade war sparks market-sell-off
US stocks tanked on Monday as investors weighed the impacts of US tariffs on Mexico, Canada, and China.
The tech-heavy Nasdaq Composite (^IXIC) fell more than 2% while the S&P 500 (^GSPC) dropped more than 1.6%. The Dow Jones Industrial Average (^DJI) tumbled 1.2%, or over 500 points.
Tech (XLK) and Consumer Discretionary (XLY) stocks, which includes automakers, led the way lower. Shares of Nvidia (NVDA) fell roughly 4%, while iPhone maker Apple (AAPL) also dropped. EV giant Tesla’s (TSLA) stock retreated more than 4%.
“In the US, growth expectations are already high, and the market appears to have priced little risk of downside from tariffs,” Goldman Sachs senior markets adviser Dominic Wilson wrote in a Sunday note.
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Nvidia sinks 4% in premarket as tariff war prompts market sell-off
Chip giant Nvidia’s (NVDA) stock fell as much as 4% premarket to lead tech lower on Monday, with US tariffs on imports from Canada, Mexico, and China set to start on Tuesday.
The AI bellwether was already on a downward trend after the release of China’s DeepSeek AI model dented hopes for the sector. Growing concerns over the possibility of wider limitations on Chinese exports have also weighed on the stock recently.
Other tech names faltering in premarket include iPhone maker Apple (AAPL), down 2%, and electric vehicle giant Tesla (TSLA), down more than 3.5%.
A market-wide sell-off was underway before the bell after the Trump administration moved forward with 25% tariffs on imports from Mexico and Canada, and 10% tariffs on imports from China over the weekend. The duties are set to start on Tuesday. Mexico and Canada have in turn ordered retaliatory duties on American goods.
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Good morning. Here’s what’s happening today.
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Dollar rises to trade near 2-year high
The US dollar (DX=F) is surging as investors weigh the risks of a trade war after President Trump’s tariff salvo.
On Monday morning, the greenback was trading near its highest level in almost two years against a basket of leading currencies, with the dollar index (DX-Y.NYB) up nearly 1%.
Canada and Mexico’s currencies were among the hardest hit after Trump said he would impose 25% tariffs on both starting Tuesday. The Canadian dollar (CADUSD=X) dropped to its lowest against the US dollar since 2003, while the Mexican peso (MXNUSD=X) sank to an almost three-year low.
The euro (EURUSD=X) also lost some ground on the heels of Trump’s warning to the EU that tariffs will “definitely happen,” though he offered no other details.
The gains for the dollar fed into worries that more expensive imports could fuel inflation, which would curb the Federal Reserve’s scope to lower interest rates.
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Big Three US automaker stocks retreat
Shares of big US automakers Ford (F) and General Motors (GM) sank in Monday’s premarket trading, mirroring a drop in European peers’ stocks.
GM fell 6.5%, while Ford moved about 4% lower. Stellantis (STLA), the last of the traditional Big Three, saw its US-listed stock retreated roughly 6%. Electric vehicle maker Tesla (TSLA) shed about 2%.
Carmakers are among the industries likely to take the biggest hit from the tariffs on Mexico and Canada, given they are heavily reliant on cross-border trade. Between 25% and 40% of the vehicles the Big Three sell in the US are imported from one of those two countries, per a Financial Times report.
Ford CEO Jim Farley told Yahoo Finance last week that he expected Trump’s tariff positioning to play out beyond February, but signaled the company could withstand them better than its rivals as it has the largest US manufacturing footprint. Read more here.
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Keep a close eye on footwear and clothing stocks
Spring break and back-to-school shopping may cost quite a bit more thanks to Trump’s new tariffs on Mexico, Canada, and China.
Here are the footwear and clothing retailers most exposed to the new tariffs, according to data from Stifel analyst Jim Duffy:
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How the market views tariffs
The reactions from Wall Street on Trump’s tariffs are trickling in, and, universally, folks view them as bad for the economy and bad for markets.
I put some of the reactions that stood out to me here.
But I liked what Goldman Sachs strategist David Kostin said this morning on the tariff front. It’s a good reminder as to what companies are now up against:
“If company managements decide to absorb the higher input costs, then profit margins would be squeezed. If companies pass along the higher costs to its end customers, then sales volumes may suffer. Firms may try to push back on their suppliers and ask them to absorb part of the cost of the tariff through lower prices.”
