After the United States imposed wide tariffs on China, Canada, and Mexico, starting a trade war that may severely impair their development and profitability, automakers, beer breweries, and nuclear power businesses led Monday’s stock market falls.
As they evaluated the dangers of a trade war following Donald Trump’s tariffs on major U.S. trading partners, investors sold equities and purchased dollars on Monday.
According to Bernstein, the auto industry may have to pay an extra $40 billion year, or an average of 7% more each car. In premarket trade, Tesla fell 3.3%, Ford down 3.4%, and General Motors fell 6.7%.
Constellation Brands, the manufacturer of Corona beer, fell 4.6%.
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U.S. and Canadian uranium miners saw declines, with Energy Fuels down 2.1% and Cameco Energy down 2.3%. According to data from the U.S. Energy Information Administration, Canada provided 27 percent of the uranium used by U.S. utilities in 2023.
Power companies that use nuclear energy, such Constellation Energy and Vistra, saw losses of 3% and 5.5%, respectively.
Trump’s changing tariff intentions, according to executives on earnings calls, could disrupt global trade and force some businesses to relocate their production to the United States.
Bruce Kasman, chief economist at J.P. Morgan, wrote in a note that “it will disrupt established supply chains and depress North American business sentiment beyond the rising cost of moving goods across borders.”
However, it will be more difficult for smaller businesses without international activities that require foreign components to counteract the effects of the tariffs. The Russell 2000 futures fell 2.2%, indicating steep drops for small-cap equities with a domestic focus.
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Trump stated that his proposals would cause a temporary inconvenience and admitted that tariff expenses are occasionally passed on to consumers. Additionally, he stated that “very substantial” taxes against the European Union were planned.
Stocks of major tech companies also declined. Amazon, Apple, and Microsoft all saw declines of 1% to 2.2%, while Nvidia saw a 3.8% decline.
Reduced profitability and increased inflation
Tit-for-tat tariffs have the potential to reduce corporate earnings, increase consumer prices, and force the Federal Reserve to reconsider its cycle of rate cuts, which might upset the U.S. stock markets, which are now trading close to all-time highs.
Although the brokerage thinks the charges on Canada and Mexico are probably only going to be temporary, Goldman Sachs projected a 2%–3% drop in its S&P 500 earnings projections if the sweeping tariffs were maintained.
“This weekend’s actions challenge our underlying view that the Trump administration will strive to limit disruptive policies as it balances its desire to reduce engagement with the world with a commitment to support US businesses,” Kasman stated.
“The risk is that the policy mix is tilting (perhaps unintentionally) into a business-unfriendly stance.”
As investors fled to safety, pushing bitcoin to a three-week low, cryptocurrency stocks fell, with exchange Coinbase down 5.7%.
Shares of Chinese e-commerce companies listed in the United States fell, with Temu’s parent company, PDD Holdings, down 5%. The iShares China large-cap ETF as a whole fell 1.6%.
The MSCI Mexico ETF had a 3.3% loss in shares, while its Canadian counterpart saw a 2.2% decline.
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