Financial markets showed resilience Tuesday morning despite
President-elect Donald Trump’s unexpected announcement of potential new tariffs, with U.S. stock futures indicating modest gains at the opening bell.
In a late Monday post on Truth Social, Trump outlined plans to impose substantial tariffs on major trading partners, including a 10% levy on Chinese imports and 25% tariffs on goods from Canada and Mexico, despite these nations’ participation in the USMCA trade agreement. Trump connected these proposed trade measures to concerns over drug trafficking and immigration, stating the tariffs would remain until issues with illegal border crossings and fentanyl trafficking are addressed.
The announcement created ripples across currency markets, with the U.S. dollar index climbing to 106.821 against major currencies. Both the Canadian dollar and Mexican peso weakened in response, while the euro declined to 1.0516 against the greenback as investors speculated about potential expansion of tariffs to European trading partners.
In the bond market, yields on 10-year Treasury notes increased by 2 basis points to 4.301%, while 2-year notes retreated from gains achieved after Monday’s successful $69 billion auction, settling at 4.275%.
Early indicators suggested a cautious start for Wall Street, with S&P 500 futures pointing to a 6-point increase, Dow Jones Industrial Average futures up 20 points, and Nasdaq futures suggesting a 22-point advance.
Several individual stocks garnered attention in pre-market trading. Rivian Automotive shares surged 7.2% following news of a conditional $6.6 billion Department of Energy loan approval for its Georgia EV factory development. Intel experienced a 2% increase to $25.34 after securing $7.9 billion in Chips Act funding for semiconductor facilities across Oregon, New Mexico, and Arizona.
Eli Lilly shares climbed 2% to $770.00 following proposed Medicare and Medicaid rule changes that would expand coverage for anti-obesity treatments, including the company’s Mounjaro medication. Similarly, Novo Nordisk’s U.S.-listed shares rose 1.7% in pre-market trading.
European markets reflected concerns about potential U.S. tariffs, with the Stoxx 600 declining 0.56%, led by weakness in automotive stocks. London’s FTSE 100 dropped 0.34%.
Asian markets also faced downward pressure, with China’s CSI 300 falling 0.21% and the Shanghai Composite declining 0.12%. The broader MSCI ex-Japan index decreased 0.55%, while Japan’s Nikkei 225 closed down 0.87%.
The market’s relatively measured response to Trump’s tariff threats suggests investors are balancing these concerns against other positive factors, including the recent nomination of Scott Bessent as Treasury Secretary, which had initially boosted market sentiment earlier in the week. However, the situation highlights the potential for increased trade-related market volatility as the year draws to a close.
The proposed tariffs represent a significant shift in trade policy that could impact global commerce and supply chains, particularly affecting relationships with key U.S. trading partners. While markets have shown initial resilience, the long-term implications of such trade measures remain a source of uncertainty for investors navigating an already complex economic landscape.