Auto, nuclear, beer firms hit hard as Trump tariffs rattle markets

Automakers, beer brewers and nuclear power companies led declines in a broad equity pullback on Monday after the US hit Mexico, Canada and China with sweeping tariffs, launching a trade war that could cripple their growth and profits. 

Investors sold stocks and bought dollars on Monday, as they assessed the risks of a trade war after Donald Trump imposed tariffs on top US trading partners. 

The auto sector could face additional costs of up to $40 billion per annum, or 7 per cent higher per car on average, Bernstein estimated. General Motors slid 6.7 per cent, Ford dropped 3.4 per cent and Tesla shed 3.3 per cent in premarket trading. 

Corona beer maker Constellation Brands tumbled 4.6 per cent. 

Uranium miners in US and Canada fell, with Cameco Energy down 2.3 per cent and Energy Fuels 2.1 per cent. Canada

supplied 27 per cent of uranium to US utilities in 2023, according to data from the US Energy Information Administration data.

Nuclear-energy power providers such as Vistra and Constellation Energy shed 5.5 per cent and 3 per cent, respectively. 

Executives on earnings calls have said Trump's shifting plans for tariffs could disrupt world trade and prompt some companies to move production to the US 

"Beyond the rising cost of moving goods across borders, it will disrupt established supply-chains and depress North American business sentiment," Bruce Kasman, chief economist for J.P.Morgan, said in a note. 

Still, smaller companies without global operations that need foreign parts will find it harder to offset the impact of the tariffs. The Russell 2000 futures slumped 2.2 per cent, pointing to sharp declines for domestically focused small-cap stocks. 

Trump acknowledged that tariff costs are sometimes passed along to consumers and said his plans might cause a short-term disruption. He also said something "very substantial" was planned for tariffs against the European Union. 

Heavyweight Big Tech stocks also fell. Nvidia was down 3.8 per cent, while Microsoft, Apple and Amazon fell between 1 per cent and 2.2 per cent. 

HIGHER INFLATION, LOWER PROFITS 

The tit-for-tat tariffs could eat into company profits, raise consumer prices and prompt the Federal Reserve to rethink its rate-cutting cycle that could upend the US stock markets that are currently trading near record levels. 

If the sweeping tariffs were sustained, Goldman Sachs estimated a reduction of 2 per cent-3 per cent in its S&P 500 earnings forecasts, although the brokerage believes the duties on Canada and Mexico are likely to be temporary. 

"This weekend's actions challenge our underlying view that the Trump administration will strive to limit disruptive policies as it balances its desire to reduce engagement with the world with a commitment to support US businesses," Kasman said. 

"The risk is that the policy mix is tilting (perhaps unintentionally) into a business-unfriendly stance." Crypto stocks dropped, with exchange Coinbase down 5.7 per cent, as investors' flight to safety pushed bitcoin to a three-week low. 

US-listed shares of Chinese e-commerce firms declined, with PDD Holdings, parent of Temu, down 5 per cent. The broader iShares China large-cap ETF slipped 1.6 per cent. 

IShares of MSCI Mexico ETF dropped 3.3 per cent, while the Canadian counterpart declined 2.2 per cent.  (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)