US stock futures experienced gains as Wall Street braced for the impact of President Donald Trump’s comprehensive tariffs on major trading partners, which took effect on March 4, 2025. Futures tied to the S&P 500 rose by 0.3%, the Nasdaq increased by 0.5%, and Dow Jones futures crept up by 0.2%. The initiation of these tariffs has stirred market apprehension as traders absorbed the news of Canada and Mexico imposing 25% duties on US imports.
On March 3, 2025, Trump declared there was "no room left for Canada or Mexico" to negotiate their way out of the tariffs which had been under discussion. Following this announcement, Canadian Prime Minister Justin Trudeau swiftly responded by detailing retaliatory tariffs on $107 billion worth of US products, signaling the beginning of potential adverse economic consequences for both nations.
Within the same timeframe, Trump signed an executive order to double the US tariffs on China from 10% to 20%, citing the country's insufficient actions toward combating the illicit drug crisis. This escalated trade tensions significantly, causing tumult within the markets, particularly affecting technology stocks such as Nvidia, whose shares plummeted nearly 9% to their lowest level since September 2024, attributed to reports of smuggled chips being sent to China.
Investors were noticeably jittery. On March 4, Asian equities mirrored the largest declines observed on Wall Street this year, with the S&P 500 falling 1.8% and the Nasdaq losing 2.6% on March 3. The decline raised concerns about the overall economic impact as new tariffs were expected to influence commodity prices and production timelines critically. With factory gate prices recently reaching their highest rates in almost three years, inflationary pressures seemed imminent.
Market insiders voiced varying concerns about Trump’s new international policies. Wang Zhuo, partner at Shanghai Zhuozhu Investment Management, noted, "Higher China tariffs will likely hurt the U.S. itself as it needs cheap Chinese products to bring down inflation." Hiring on these tariffs, he elaborated, would likely have reciprocal effects and could hurt US agriculture products significantly.
Despite Trump's combative strategies, China's quick announcement of reciprocal tariffs indicated their readiness to engage diplomatically without inciting future trade wars. Meanwhile, the Canadian dollar and Mexican peso weakened as the economic ramifications unraveled. The Australian dollar also felt the pressure as it dropped, reflecting the risk aversion among global investors.
Having opened to market declines across Asia, both Brent and West Texas Intermediate crude oil prices continued their downtrend, settling at the lowest levels since early December. Brent dropped 0.9% to $70.97 per barrel, and West Texas Intermediate fell 0.7% to $67.87 per barrel amid forecasts of OPEC+ maintaining planned output increases.
Simultaneously, Bitcoin's days of optimism saw it trading around $86,000 after earlier reaching close to $95,000, arising from diminished hopes of US strategic moves toward cryptocurrency regulation, indicated by Trump’s social media notes on five specific tokens, including Bitcoin.
The European market anticipated opening lower, with STOXX 50 futures indicating declines amid freshly formed tensions resulting from the tariffs. Though US Treasury yields dropped to their lowest since October at 4.115% on March 4, reflecting investors' switch to safer assets, the financial community remained on guard as the real economic effects of the tariffs began to take shape.
While traders awaited earnings reports from retail giants Best Buy and Target before Tuesday’s market calls, sentiment was volatile following developments with Nvidia and broader market repercussions stemming from the tariffs set to change trading dynamics extensively. With international trade paradigms shifting drastically, the coming weeks will reveal much about how these tariffs will affect the global economy and US markets.