Updated February 03, 2025 at 12:21 PM ET
Wall Street is feeling tariff whiplash.
U.S. stocks pared back their losses by midday Monday, as President Trump said he would delay at least part of his threatened global trade war.
Major stock indices plunged in early Monday trading, but by midday had somewhat recovered: The Dow was trading down about 150 points or 0.3%. The tech-heavy Nasdaq was down 1.2% and the broader S&P 500 index fell 0.8%.
Over the weekend, President Trump's announced new tariffs on the United States' largest trading partners. Starting Tuesday, imports from Canada and Mexico will pay 25% duties and those from China 10%. Energy imports from Canada will be lower with a 10% duty.
But on Monday morning, after a phone call with Mexican President Claudia Sheinbaum, Trump announced a one-month pause on the tariffs on Mexican goods. He called the conversation with Sheinbaum "very friendly," in a post on his Truth Social network.
Trump added that his administration will continue to negotiate with Mexico, "as we attempt to achieve a 'deal' between our two Countries."
The weekend executive action sent a wave of fear rippling through markets globally.
In a note to clients before Trump announced the pause, economists from the global bank BNP Paribas said that "the announced increase in tariffs were even larger and came faster than we had penciled in." The economists say tariffs would put the brakes on economic growth and U.S. consumer prices "should rise sharply over the coming months."
Investors in some American automakers appeared to welcome the news of the Mexican tariff reprieve: Shares in GM and Ford were each down about 1% by midday, regaining some ground from the morning. (Tesla was still down more than 4%.)
Automakers run a complex supply chain web between the U.S., Canada and Mexico. Many also manufacture cars in Mexico or Canada before exporting them to the U.S.
The President's tariff threats also rattled markets in Europe. The pan-European STOXX 600 index fell 1% Monday, and Germany's DAX fell 2%. The FTSE 100 index, which tracks the hundred largest companies listed in London, was down 1%.
President Trump said Sunday night that new tariffs on the EU would "definitely happen" but suggested he may take a softer line on the U.K., saying he had a good relationship with Prime Minister Keir Starmer but that the U.K. "might" still face penalties.
Copyright 2025 NPR