Stocks fell from all-time highs and the dollar climbed after President Donald Trump began unveiling his tariff plans, with the U.S. setting levies for nations such as Japan, South Korea and South Africa starting in August — triggering a selloff in their currencies.
The S&P 500 lost about 1%, with megacaps getting hammered as Tesla Inc. tumbled 7% after Elon Musk announced he’s formed a new political party, raising concern about his company’s outlook.
Longer-dated Treasur7s led losses Monday. Emerging-market currencies sank as Trump warned he’d add extra tariffs on any country that aligns with “the Anti-American policies of BRICS.”
Trump unveiled the first in a wave of promised letters that threaten to impose higher tariffs rates on key trading partners, including levies of 25% on goods from Japan and South Korea.
He also announced 25% rates on Malaysia and Kazakhstan, while South Africa would see a 30% tariff and Laos and Myanmar would face a 40% levy.
White House Press Secretary Karoline Leavitt said there will be “approximately 12 other countries” that receive notifications about their tariffs Monday directly from the president, and that Trump would post the letters directly to social media. Additional letters will come in the coming days, she said.
“Investors should be alert to headline risk,” said Fawad Razaqzada at City Index and Forex.com. “The scope for last-minute deals is high, but so too is the possibility of renewed trade tensions.”
To Ian Lyngen and Vail Hartman at BMO Capital Markets, the actions of the administration during the last few months have left the impression this is just “another tactic” in the negotiation process.
The European Union said it’s closing in on a framework trade agreement with the U.S. after the head of the bloc’s executive arm, Ursula von der Leyen, held a call with Trump Sunday. Bessent told CNBC said he expected to meet with his Chinese counterpart in the coming weeks.
“Short-term ‘deals’ are limited in scope and leave several questions unanswered,” said Seth Carpenter at Morgan Stanley. “Comprehensive trade deals that reduce trade uncertainty will take much longer to finalize, and will require clarity on ongoing investigations and legal challenges.”
So far, the U.S. economy is holding up, hiring is healthy, and inflation has remained tame. But the Federal Reserve is wary about tariffs despite pressure from Trump to lower rates, and wants to see how they feed through to output in the next few months.
Investors on Wednesday will parse minutes of the Fed’s June policy meeting.
Elsewhere, copper and other industrial metals slid after Trump injected fresh uncertainty into his trade agenda with a pledge to impose a 10% tariff on countries aligned with the BRICS bloc of nations.
Oil crept higher even after OPEC+ decided on a bigger-than-expected production increase next month, with the group’s leadership showing confidence the market can absorb the extra barrels.
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