U.S. Stock Futures Drop: U.S. stock futures drop on Monday, June 2, 2025, after former President Donald Trump announced steep tariff hikes. The tariffs on imported steel and aluminum will double to 50% starting Wednesday. The move follows accusations against China for breaking a trade agreement.
Investors fear that rising tariffs will renew trade tensions and affect global markets. The Dow, S&P 500, and Nasdaq futures fell in early trading. This announcement comes as the market was showing signs of recovery due to earlier relief on some tariffs.
Also Read | U.S. Dollar Fall Deepens as Global Tensions and Tariff Worries Rise
U.S. Stock Futures Drop: Insights
- Dow futures fell 218 points or 0.52%.
- S&P 500 futures dropped 34 points, or 0.57%.
- Nasdaq futures slid 156.5 points or 0.73%.
- Cleveland-Cliffs surged 26.2% in premarket trading.
- Nucor and Steel Dynamics also gained 14.1% and 13.4% respectively.
- Tesla dropped 2% after weak sales in Europe.
- Moderna rose 4.6% after the FDA approved its COVID-19 vaccine for seniors.
- Fed Chair Jerome Powell is scheduled to speak later today.
- A key jobs report is expected on Friday.
- RBC Capital Markets raised the S&P 500 year-end target to 5,730.
Background
Tariff tensions have been a major concern throughout Trump’s presidency. Last month, markets rallied after the government paused some tariffs on China and reduced threats against the EU. This gave the S&P 500 its strongest month in 18 months. However, recent developments reignite trade worries.
A court had briefly blocked Trump’s earlier tariffs, but a federal appeals court reinstated them last Thursday. This uncertainty is unsettling for investors. Now, with U.S. stock futures dropping again, the spotlight returns to Trump’s unpredictable trade approach.
Main Event
On Friday, May 30, 2025, Trump announced that tariffs on imported steel and aluminum would rise to 50% from 25%. The decision takes effect this Wednesday. The announcement came hours after he accused China of violating trade deals. This sudden policy shift revived fears of prolonged trade conflict.
The market reacted quickly. At 5:22 a.m. ET on Monday, U.S. stock futures drop sharply. Dow E-minis fell 218 points (0.52%). S&P 500 E-minis dropped 34 points (0.57%). Nasdaq 100 E-minis sank 156.5 points (0.73%).
Despite the drop, U.S. steel stocks soared. Cleveland-Cliffs jumped over 26%. Nucor rose by 14.1%, while Steel Dynamics climbed by 13.4%. The jump suggests optimism among steel producers benefiting from new tariffs.
Jim Reid from Deutsche Bank noted that it’s hard to predict U.S. trade policy now. He added that the recent court ruling and its reversal add more uncertainty. Even though aggressive policy may have peaked, confusion remains.
Tesla stock declined by 2% after reporting lower sales in several European markets. Moderna shares, however, gained 4.6% following FDA approval for its updated COVID-19 vaccine.
Investors are also watching for Jerome Powell’s comments later today and key manufacturing data releases. The upcoming nonfarm payroll report will provide a clearer picture of the U.S. economy amid tariff-related turmoil.
A busy day of trading unfolds at the New York Stock Exchange on May 19, 2025, with floor brokers actively making transactions.
Photo Credits: Jeenah Moon (REUTERS).
Implications
The sudden tariff hike may disrupt trade and supply chains, especially in the manufacturing sector. For consumers, it could mean higher prices on goods involving steel or aluminum. For businesses, cost uncertainty may lead to delayed investments. U.S. stock futures drop signals a cautious mood among investors.
Global markets may also react, especially if other countries respond with countermeasures. Meanwhile, the Federal Reserve faces new challenges. Inflation could rise temporarily, complicating decisions about interest rates. If the economic outlook weakens, the Fed might still cut rates later this year, as stated by Governor Waller.
Conclusion
As U.S. stock futures drop, market attention shifts back to trade policy. Experts say tariff volatility could linger, causing waves in the global economy. Jerome Powell’s speech and the jobs report will offer fresh insights later this week. Until then, investors must navigate a tricky path shaped by unpredictable policy shifts and global reactions.
