US Stock Futures Plummet in the Wake of Trump’s Imposition of Tariffs, Profits and Payrolls in the Spotlight

U.S. stock index futures fell sharply on Monday as investors weighed the potential impact on the U.S. economy and corporate profits after President Donald Trump imposed trade tariffs on the country’s major trading partners.

Dow Jones futures fell 620 points, 1.4%, S&P 500 futures fell 97 points, 1.6%, and Nasdaq 100 futures fell 395 points, 1.8%.

Trump Signs Executive Order to Impose Tariffs

On Saturday, Trump signed an executive order imposing tariffs of 25% on Canada and Mexico, along with an additional 10% tariff on China, demanding that these countries take action to stop the flow of illegal drugs and immigrants into the United States.

The new trade tariffs, set to take effect on February 4, apply to all imports from the three nations; however, oil and gas imports from Canada will be subject to a lower tariff.

All three affected countries rejected the tariffs and announced plans for retaliatory measures.

Trump had largely kept details of the tariffs undisclosed over the past two weeks, leading investors to anticipate some form of compromise. The sharp decline in futures reflects the market’s reaction to the unexpected scope of the measures.

Analysts believe these tariffs will fuel inflation in the U.S., as domestic importers will bear most of the cost. Higher inflation reduces the likelihood of further interest rate cuts by the Federal Reserve.

“The resulting increase in U.S. inflation from these tariffs and any additional measures will be even faster and greater than we initially expected… the window for the Federal Reserve to resume interest rate cuts at any time over the next 12 to 18 months has slammed shut,” Capital Economics analysts stated in a note.

Earnings Season Reaches Its Busiest Moment

Beyond the turmoil surrounding tariffs, this week marks the peak of fourth-quarter earnings season, which has gained increasing importance in gauging the state of the market.

Approximately 120 companies from the S&P 500 are set to release their results, including Alphabet (GOOG), the parent company of Google, and e-commerce giant Amazon (AMZN), which will report their quarterly earnings on Tuesday and Thursday, respectively.

Several other major corporations, such as Alibaba (BABA), AMD (AMD), Walt Disney (DIS), Qualcomm (QCOM), and Uber (UBER), will also publish their reports throughout the week.

Additionally, the January non-farm payroll report, a key indicator of labor market health, will be released on Friday. Economists estimate that 154,000 jobs were created last month, down from 256,000 in the previous month, while the unemployment rate is expected to remain steady at 4.1%.

Crude Oil Soars Due to Supply Disruption

Oil prices surged on Monday as President Trump’s announcement of tariffs on imports from two of the U.S.’s largest suppliers raised concerns about potential disruptions to oil supply chains.

The United States imports approximately 4 million barrels of oil per day from Canada and nearly 500,000 barrels daily from Mexico.

It is expected that the new tariffs will increase costs for U.S. refineries, particularly those in the Midwest and Gulf Coast regions, potentially leading to higher fuel prices and production cuts.