Dow futures were 155 points lower Monday as Wall Street braced for the fallout of worsening global trade tensions.
China on Friday retaliated with new tariffs on American imports after the Trump administration raised tariffs on Chinese goods. Also on Friday, President Donald Trump announced the United States would remove India from a special trade program. And investors are still trying to determine how new tariffs on Mexico might affect American businesses and the economy.
The sudden, unexpected expansion of tariffs have rattled Wall Street.
The Dow tumbled below 25,000 points to four-month lows on Friday. The Dow and S&P 500 each declined nearly 7% in May, their first losing months since December. The Nasdaq tumbled 8% on the month, its worst May since 2010.
Global stock markets had a rough start to June on Monday after China said over the weekend that it would “not back down” in the trade fight with the United States.
Tokyo’s Nikkei closed down 0.9%, while the Shanghai Composite declined 0.3%. Benchmark indexes in London and Paris dipped 1% in early trading. S&P 500 futures were down 0.6%, mirroring the Dow. Nasdaq futures fell 0.7%.
Trump’s threat to impose escalating tariffs on Mexico, one of America’s largest and most important trading partners, amplified fears about slowing economic growth. The United States imported $346 billion of goods from Mexico last year, including everything from auto parts and avocados to beer and televisions. Automakers, including Fiat Chrysler, General Motors and Ford, rely on Mexico as a vital part of their supply chain.
And India is an important trading partner for the United States too. Access to India’s population of 1.3 billion people is crucial for American businesses, with big names like Amazon, Walmart, Google and Facebook investing billions of dollars in the country in recent years. India’s 600 million internet users — more than any country except China — are also a big draw for Netflix, Uber and Disney.
Wall Street has already been shaken by the trade war with China. The growth in tariffs are beginning to take an effect on the Chinese economy: Activity in China’s vast factory industry fell to a three-month low in May. New orders declined, likely reflecting pressure from the trade war.
Investors fear the rise in tariffs will slow economic growth, dent consumer confidence and derail business investment.