The U.S. stock market recovered some ground on Monday after President Donald Trump announced a delay in some of his planned global trade tariffs. The Dow was down about 150 points or 0.3%, the Nasdaq fell 1.2%, and the S&P 500 index dropped 0.8% by midday. Trump had announced significant tariffs on imports from Canada, Mexico, and China over the weekend.
Imports from Canada and Mexico were set to face 25% duties starting Tuesday, while those from China would incur 10% tariffs. Energy imports from Canada would also be subjected to a 10% duty. However, following a phone call with Mexican President Claudia Sheinbaum on Monday morning, Trump announced a one-month pause on the tariffs for Mexican goods.
He described the conversation as “very friendly” on his Truth Social network and said negotiations with Mexico would continue. The weekend’s executive action had initially sparked concern among global markets.
Trump’s tariff delay boosts stocks
Economists from BNP Paribas noted that the tariffs were larger and implemented more quickly than expected. They predicted that the tariffs could hinder economic growth and cause U.S. consumer prices to rise sharply. The news of the Mexican tariff reprieve was somewhat welcomed by investors in American automakers.
Shares in GM and Ford were each down about 1% by midday, recovering slightly from the morning’s losses. Tesla, however, remained down more than 4%. Automakers rely on a complex supply chain spanning the U.S., Canada, and Mexico, with many manufacturing cars in Mexico or Canada and then exporting them to the U.S.
Trump’s tariff threats also affected European markets.
The pan-European STOXX 600 index fell 1%, Germany’s DAX dropped 2%, and the FTSE 100 index was down 1%. On Sunday night, Trump said that new tariffs on the EU would “definitely happen” but hinted at a softer approach towards the U.K., citing a good relationship with Prime Minister Keir Starmer, although he indicated that the U.K. might still face penalties. The global markets remain watchful as negotiations continue and further announcements are anticipated.
