US President Donald Trump has ordered tariffs on Canada, Mexico, and China, that will start on Tuesday.
Investors fear that the tariffs will increase inflation and slow Federal Reserve rate cuts.
US stocks dropped at the open, following European and Asian markets lower.
Global markets started the week in the red on the first day of trading after President Donald Trump’s tariff threats for key trading partners.
On Saturday, Trump ordered 25% tariffs on goods from Canada and Mexico and a 10% tariff on China, which are set to start at 12:01 a.m. ET on Tuesday.
Investors fled from risks following the announcement with stocks first falling in Asia, before the impact spread westwards, hitting European trade, and then US markets.
Soon after the open at around 9:45 a.m. ET, the S&P 500 was 1.5% lower, while the Nasdaq fell 1.9%, and the Dow Jones dropped 1.2%.
Earlier in Asia, Hong Kong’s Hang Seng Index closed little changed after losing as much as 2.3%, while Japan’s Nikkei 225 index closed 2.7% lower.
South Korea’s Kospi closed 2.5% lower. Australia’s ASX 200 closed 1.8% lower.
Taiwan’s Taiex index closed 3.5% down in its first day of trade after Chinese New Year public holidays, as chip giant TSMC ended the day 5.7% lower after catching up with DeepSeek-related selloffs last week.
China’s markets were closed for public holidays. They reopen on Wednesday.
Markets across the Atlantic also spent Monday in the red with the UK’s FTSE 100 down 1.4% by 9:45 a.m. ET. Europe’s Stoxx 600 tanked 1.3% after Trump said tariffs on goods from the European Union would «definitely happen.»
«I think it’s a major shock — that’s what markets are telling us this morning,» Arancha González Laya, a former Spanish foreign affairs minister told Bloomberg TV.
«It’s a breach of trust, which in my view, has geopolitical implications. It’s a major economic disruption,» she said.
Auto stocks were particularly hard-hit Monday, with Honda, Nissan, and Toyota all seeing major drops in Asian trade, and European makers like BMW, Stellantis, and Volkswagen falling upwards of 5%.
In the currency market, the US dollar surged, with the Dollar Index gaining 0.85%.
The Canadian dollar sank to its lowest in over 20 years. The euro was 1% lower.
Meanwhile, the US dollar rose 1.5% against the Mexican peso.
Strength in the dollar not only reflected weaker demand for rival currencies but also expectations that the tariffs would increase demand for US assets and reduce imports.
Ipek Ozkardeskaya, an analyst at Swissquote Bank, said the dollar rose because it was «widely in demand.»
Story Continues
