Stocks rebounded on Monday after taking a sharp dive at the start of trading following President Trump’s decision to impose new tariffs on key US trading partners including China, Canada and Mexico — only for him to delay the levies following a conversation with the Mexican leader.
The Dow Jones Industrial Average, which dropped by as many as 560 points, recovered to close down 122 points, or 0.3%, on Monday.
The S&P 500, which had declined by as much as 1.6%, slipped 0.8% while the Nasdaq, which lost 1.95% to drop nearly 400 points after the opening bell, ended down 235 points, or 1.2%.
Markets reacted to the news announced by Mexican President Claudia Sheinbaum, who said that the US would hold off on imposing tariffs on Mexican imports for a month in exchange for concessions on the border.
The move by Trump over the weekend to levy tariffs on imports from Canada, Mexico and China has heightened concerns about the potential impact on inflation and economic growth, fueling fears of a global trade conflict.
The tariffs could potentially impact companies with supply chains tied to North America.
Markets around the world reacted to the news on Monday morning.
European stocks saw a significant decline, with Germany’s DAX index falling nearly 2%.
Bitcoin also took a hit, dropping from above $102,000 to around $95,000, while ether lost 11%. But bitcoin also started to recover just before noon on Monday — trading at around $98,800 per unit.
Meanwhile, the US dollar gained strength, with the ICE US Dollar Index jumping nearly 1%. The tariffs also had an impact on energy prices.
Follow the latest on President Trump’s tariffs
Early Monday morning, West Texas Intermediate crude jumped 2% to $74.20 per barrel, while Brent crude saw a 1% rise, reaching $76.42 per barrel.
But those prices fell toward noon. WTI was trading at 0.14% above its price.
The tariffs announced on Saturday included a 25% levy on goods from Mexico and Canada, along with a 10% tariff on imports from China.
Energy imports from Canada faced a slightly lower 10% tariff.
Canada responded with its own retaliatory measures, while Mexico indicated it would explore similar actions against US imports.
China, on the other hand, declared its intent to challenge the tariffs at the World Trade Organization. Trump also suggested that tariffs on European Union goods could follow.
European Union officials cautioned that they would respond firmly if Trump follows through with additional tariffs on European imports.
Economists and analysts have expressed concern over the latest developments.
A report from Goldman Sachs noted that while the direct economic impact of the tariffs may be limited, the broader consequences could be significant.
The statement warned that these measures could deepen fears about future trade policy risks and retaliation from affected countries.
Market strategists have emphasized that investors should take the administration’s tariff plans more seriously. According to a report from Wolfe Research, if this shift in policy expectations is suddenly reflected in market pricing, the coming days could see considerable volatility.
The timing of the tariff announcement coincides with an important earnings period, with over 120 S&P 500 companies set to release quarterly reports. Among the high-profile firms reporting this week are Alphabet, Amazon, and Palantir, along with consumer brands like Disney and Mondelez.
Additionally, the latest nonfarm payrolls report, scheduled for Friday, is expected to indicate that 175,000 jobs were added last month, based on estimates from Dow Jones analysts.
Despite recent market turbulence, stocks ended January on a positive note. The S&P 500 advanced 2.7%, while the Nasdaq Composite gained 1.6%. The Dow Jones Industrial Average led the way with a 4.7% increase for the month.
With escalating trade disputes and a volatile market environment, analysts anticipate continued uncertainty in the weeks ahead. Market trends will largely depend on further developments in trade policy, corporate earnings results, and key economic indicators set to be released in the coming days.
Investors are closely monitoring Washington’s next steps as they brace for potential economic repercussions of the latest round of tariffs.
