Stock futures fell Monday morning following the White House’s announcement that tariffs are set to go into effect on August 1, rather than July 9. The Dow Jones Industrial Average futures slid 110 points, or 0.3%, while S&P 500 futures and Nasdaq 100 futures each dipped by 0.3%. In an interview with reporters on Sunday, President Donald Trump and Commerce Secretary Howard Lutnick clarified the timeline for the new tariff rates.
“Tariffs go into effect Aug. 1. But the president is setting the rates, and the deals, right now,” said Lutnick, with Trump nodding in approval.
Earlier in the day, Treasury Secretary Scott Bessent appeared on CNN’s “State of the Union,” stating that tariffs would revert to April 2 levels on August 1 if no trade deals are signed. Investors had expected tariffs to be implemented this week following the end of a 90-day reprieve on April’s tariffs for most U.S. trading partners. Exacerbating trade concerns, Trump also threatened an additional 10% tariff on countries that align with the “Anti-American policies” of BRICS (Brazil, Russia, India, China, and South Africa).
Trump did not elaborate on the specific policies targeted. The BRICS group recently met in Rio de Janeiro, Brazil, where they expressed a desire to move away from U.S. dollar dependence. The S&P 500 and Nasdaq Composite closed at all-time highs on Friday, attributed partly to investor confidence that the most severe tariffs announced in April would not be implemented.
Tariff timeline unsettles stock futures
However, investor sentiment remains wary, fearing increased market volatility as trade updates emerge from the White House. “Ultimately, trade negotiations usually take a long time to negotiate; free trade arrangements the US negotiated have taken an average of 3 years,” wrote Rajeev Sibal, senior global economist at Morgan Stanley.
“While the negotiations that are currently taking place are likely to be narrower than a full-fledged free trade agreement, the historical precedent remains informative.”
Some investors predict that despite potential trade disruptions, the stock market rally can continue. “I agree with anybody who says that, ‘Look, we’ve reshaped some of the economic flows around tariffs,’ but that’s an upside story because if it plays out better, that’s an earnings surprise,” said Tom Lee, head of research at Fundstrat Global Advisors. Tesla shares dropped over 6% after CEO Elon Musk announced the launch of his own political party.
The new party would focus on controlling certain key Senate and House districts to influence legislative decisions. Musk indicated that gaining control over “2 or 3 Senate seats and 8 to 10 House districts” could be sufficient to enact substantial political change. In Europe, stocks exhibited mixed performance as the new trading week began.
The pan-European index hovered just below flatline, with no clear consensus among regional sectors. The London index fell 0.1%, France’s index remained largely unchanged, and Germany’s index rose by 0.4%. As trade negotiations continue and new tariffs loom, both U.S. and global markets are poised to react.
Investors are watching closely, balancing optimism for a continued rally with concerns over trade disruptions and geopolitical developments.
