The stock market experienced a significant sell-off on Monday, driven by President Donald Trump’s announcement of steep tariff hikes against three of the U.S.’s top trading partners. The Dow, S&P 500, and Nasdaq opened down by 1.4%, 1.6%, and 1.8%, respectively, as investors reeled at the prospect of a global trade war. Trump announced 25% tariffs on goods from Canada and Mexico, as well as 10% on those from China, set to take effect on Tuesday.
The move sparked widespread criticism and even an admission from Trump that consumers might experience short-term pain. CNBC’s Jim Cramer expressed sharp criticism of Trump’s tariff policies, attributing the stock market’s downturn to these moves and suggesting that China has emerged as a “very big winner” from the situation. Cramer noted that Trump’s aggressive stance towards Mexico could inadvertently confer advantages to China, stating, “I think China is a winner today, a very big winner! I think Mexico’s a very big loser because so many companies have moved from China to Mexico.”
Despite the turbulence, Cramer maintained a cautiously optimistic outlook, suggesting that the market could rally once the initial panic subsides.
He also discussed the possibility that certain products might be exempted from the tariffs, further fueling speculation and uncertainty in the markets. The Dow later recovered dramatically following an announcement that the tariffs would be paused for one month. This offered a brief respite to the markets, though the long-term outlook remains uncertain as the trade policies continue to evolve.
Cramer emphasized the importance of maintaining respectful trade relations with Mexico, given the substantial economic interdependence between the two nations.
Tariff turbulence shakes global markets
“Mexico is a huge trading partner and a lot of companies have moved from China to Mexico.
They deserve more respect,” Cramer asserted. The tariffs have caused particular anxiety among investors, leading to significant sell-offs. Cramer explained that investors shouldn’t be so shocked by Trump’s tariff hikes, as he touted such moves repeatedly during his campaign.
“Many might say this is a precarious moment,” he said. “I simply say you got what your country voted for.”
Cramer also reviewed other sector action on Monday, pointing out how companies that offer value meals and consumer products rallied, even as some rely on Mexican imports. Traders were indifferent to this potential issue because the companies do much of their business domestically, he suggested.
Investors should be prepared for more bumpy days ahead, Cramer concluded. “Get used to the turmoil,” he said. “You don’t have to enjoy it, but remember that, in the end, the President sure does.”