Trump’s Tariff Plans Shake Markets: U.S. Stocks Mixed, Crude Dips, Canadian Dollar Falls

Trump’s Tariff Talk Fuels Early Market Volatility

Markets are starting the week with heightened volatility as President Donald Trump wastes no time shaking up sentiment with comments on tariffs. Traders are grappling with the implications of potential import taxes on Canada, Mexico, and China, alongside plans to boost U.S. energy production. Early Tuesday trading highlights the uncertainty surrounding Trump’s policy actions and their impact on U.S. equities and crude oil prices.

What Did Trump Say, and Why Does It Matter?

During his first full day in office, Trump floated a 25% tariff on imports from Canada and Mexico by February 1. He also warned of potential tariffs on China if Beijing doesn’t approve a TikTok deal. While he delayed broader tariff measures, his remarks have reignited concerns about trade friction, reversing early optimism for a measured approach to trade policy.

The tariff threats sent the Mexican peso tumbling 1% against the dollar, while the Canadian dollar hit a five-year low of C$1.4515. In equities, S&P 500 futures trimmed earlier gains, leaving U.S. markets mixed heading into Tuesday’s session. These developments highlight traders’ sensitivity to Trump’s unpredictable policy announcements.

How Are U.S. Stocks Reacting?

Wall Street futures point to a cautious opening, with S&P 500 futures up a modest 0.11% and Nasdaq futures flat. Investors remain focused on Trump’s pro-business rhetoric, including promises to deregulate banking and energy sectors. However, his tariff remarks have dampened momentum from last week’s strong performance, when the S&P 500 gained 2.9%, fueled by expectations of favorable policy changes.

Oil Markets Digest Tariff Uncertainty

Crude oil prices dipped in Asian trading, with West Texas Intermediate (WTI) for March delivery down 1.16% to $76.49 per barrel. The prospect of tariffs on Canadian oil exports adds complexity, as Canada is a major supplier to the U.S. Analysts warn that these measures could inflate costs for Canadian crude while disrupting market flows. Trump’s emphasis on boosting U.S. energy production further pressures prices, though plans to refill strategic reserves could provide some support.

Could Volatility Persist in U.S. Sessions?

Traders should brace for continued volatility as Trump’s tariff proposals remain in focus. The lack of immediate action offers temporary relief but leaves markets vulnerable to sudden shifts in policy. Equities face headwinds from inflation risks tied to trade measures, while energy markets weigh higher U.S. production against potential supply disruptions.

Stocks Teeter Between Neutral and Bearish as Oil Faces Dual Pressures

The short-term outlook for U.S. stocks appears neutral, with a potential bearish tilt if tariff rhetoric escalates. Crude oil could remain under pressure due to oversupply concerns but may find pockets of bullish support from strategic reserve purchases. For traders, Trump’s unpredictable approach to trade and energy policy will be a key driver of market sentiment this week.

More Information in our Economic Calendar.