U.S. futures higher after Trump tariffs spark sharp losses – what’s moving markets

U.S. stock futures were higher on Tuesday after President Donald Trump’s decision to go ahead with tariffs on Canada and Mexico — and impose an additional 10% levy on China — weighed heavily on Wall Street. The three countries have vowed to retaliate to the import fees, sparking fears of an escalating global trade war.

1. Futures higher 

U.S. stock futures pointed broadly higher after the benchmark S&P 500 slumped to its worst day of the year so far in the prior session.

By 03:41 ET (08:41 GMT), the S&P 500 futures contract had gained 15 points or 0.3%, Nasdaq 100 futures had risen by 92 points or 0.5%, and Dow futures had moved up by 86 points or 0.2%.

The main averages sank on Monday following President Trump’s affirmation that Canada and Mexico would be unable to avoid the imposition of steep — and previously delayed — tariffs (more below). China was also hit by a 10% import duty, on top of an earlier 10% trade tax put into effect in February.

In the wake of Trump’s announcement, which erased hopes among investors for an eleventh-hour reprieve, the S&P 500 shed 1.8%, while the tech-heavy Nasdaq Composite fell by 2.6% and the 30-stock Dow Jones Industrial Average retreated by 1.5%.

“Markets have predictably reacted badly, since this raises the risk that Trump will also follow through on his threats to impose reciprocal country-specific tariffs soon, including a proposed 25% on imports from the EU, and product-specific tariffs, on not just steel and aluminum, but semiconductors, pharmaceuticals, other industrial metals and agriculture,” said Paul Ashworth, Chief North America Economist at Capital Economics.

2. Trump moves forward with tariffs

Trump’s tariffs on items from Mexico and Canada came into effect at 12:01 AM Eastern time on Tuesday.

The levies, which include a 25% fee on all imports incoming from Mexico and non-energy goods from Canada, were “all set” to go ahead, Trump said on Monday. A 10% surcharge will be collected on Canadian energy as well.

America’s southern and northern neighbors had earlier raced to appease Trump’s call for increased border security to help stem the flow of the illegal drug fentanyl and migrants into the U.S. Concessions offered in February led to a month-long postponement of the duties.

However, Trump said the countries had still not done enough to address his demands, adding that there was “no room left” for a deal to be secured. China had also not taken “adequate steps to alleviate the illicit drug crisis,” Trump said.

Economists and company executives have long argued that the tariffs on Canada and Mexico — which make up $900 billion in annual U.S. imports — threaten to upend a deeply-integrated North American economy. Along with China, Canada and Mexico account for more than 40% of total U.S. imports.

The tariffs on Canada and Mexico could lift core consumer prices in the U.S. by 0.6%, while the extra levies on China could push up prices by 0.1%, according to Goldman Sachs analysts. The prospect of Trump’s trade stance reigniting inflationary pressures has been a key concern for the Federal Reserve, with the central bank signaling that it will adopt a careful approach to future potential interest rate cuts as policymakers assess the impact of the tariffs.