Stock futures dropped to kick off February after President Donald Trump hit several key U.S. trading partners with tariffs, raising fears that a full-blown trade war would disrupt global supply chains, reignite inflation and slow the economy. Futures tied to the Dow Jones Industrial Average fell 584 points, or 1.3%. S&P 500 futures dropped 1.6%, while Nasdaq-100 futures lost 1.7%. Futures on the Russell 2000, the small-cap benchmark, lost 2.1%. The Cboe Volatility Index, Wall Street’s fear gauge, briefly spiked above 22 before trading around 19.

The impact from the new tariffs ricocheted around the globe in a risk-off move:

President Donald Trump on Saturday slapped a 25% tariff on goods from Mexico and Canada. He also placed a 10% levy on imports from China. Energy imports from Canada received a lower 10% tariff. Canada responded with retaliatory tariffs of its own, while Mexico said it would explore levies on U.S. imports. The Chinese government, meanwhile, said it would file a lawsuit with the World Trade Organization. Trump also signaled over the weekend that tariffs on the European Union would be imposed next. “While the direct impact on U.S. growth from the announced tariffs is still quite modest, the risk is that these policy shifts amplify concerns about future trade policy risks and potential retaliation,” wrote Goldman’s Dominic Wilson in a Sunday note. “The actions may also challenge the market’s confidence that the Administration will avoid policies that push growth lower or inflation higher.” U.S. automakers with big North American supply chains led the decline, with General Motors shares off by 7% and Ford down by 4% in premarket trading. Auto suppliers including Aptiv and Avery Dennison lost 5% and 2%, respectively. Engine maker Cummins lost 3%. Constellation Brands, a large importer of alcohol from Mexico, tumbled 5%. Shares of Chipotle, which imports avocados from Mexico, lost 3%. Nike was down 2%, while fellow clothing maker Lululemon shed 3%. One of the positive groups were steelmakers, with Nucor gaining 2% and Steel Dynamics up nearly 4% in premarket trading. “Markets may now need to take the rest of Trump’s tariff agenda literally rather than just seriously,” said Tobin Marcus, Wolfe Research head of U.S. policy and politics, in a note. “If this new level of seriousness gets priced in suddenly, Monday could be a rough day for markets.” The emerging trade war comes as investors are dealing with the biggest stretch for fourth-quarter earnings reports and a key economic reading on the labor market this week. More than 120 companies in the S&P 500 are set to report their results, including tech names Alphabet, Amazon and Palantir, as well consumer giants, including Walt Disney and Mondelez.  The January nonfarm payrolls report will be out Friday with economists polled by Dow Jones expecting that 175,000 jobs were added last month. Stocks are coming off of a volatile few weeks to start 2025 as investors grappled with constant headlines from a new White House administration and cracks in the artificial intelligence trade that’s led the bull market. The three major U.S. indexes ended Friday’s trading session in the red, but traders still closed off the first month of the year with gains. The S&P 500 added 2.7% and the tech-heavy Nasdaq Composite added 1.6% in January, while the Dow Jones Industrial Average outperformed during the period, jumping 4.7%. U.S. Treasury yields were mixed on Monday as investors weighed U.S. President Donald Trump’s new tariffs on goods from key trade partners and their impact on the economy. The 10-year Treasury yield was down about 6 basis points at 4.508%, while the 2-year Treasury yield was up less than 1 basis point at 4.245%. Asia-Pacific markets traded lower Monday after U.S. President Donald Trump levied tariffs on Canada, Mexico and China over the weekend. Australia’s S&P/ASX 200 fell 1.79% to close at 8,379.4. Japan’s Nikkei 225 fell 2.66% to close at 38,520.90, while the Topix lost 2.45% to end at 2,720.39. South Korea’s Kospi dropped 2.52% to end the trading day at 2,453.95 and the small-cap Kosdaq traded 3.36% lower to close at 703.8. Hong Kong’s Hang Seng Index fell 0.3% in its last hour of trade. Chinese markets remain closed for the Lunar New Year holiday. Oil prices rose on Monday after U.S. President Donald Trump imposed tariffs on Canada, Mexico and China, raising fears of supply disruption, though gains were capped by concern over what could be an economically damaging trade war. Brent crude futures rose $1.21, or 1.6%, to $76.88 a barrel after touching a high of $77.34. U.S. West Texas Intermediate crude futures were up $1.84, or 2.5%, at $74.37 after touching their highest since Jan. 24 at $75.18. Gold prices fell on Monday after rising to an all-time high in the previous session, as the U.S. dollar strengthened on mounting fears of a global trade war following U.S. President Donald Trump’s sweeping tariff measures. Spot gold fell 0.1% to $2,798.47 per ounce after prices hit a record peak at $2,817.23 on Friday. U.S. gold futures were 0.1% lower at $2,831.20. The U.S. dollar index hovered near a three-week peak, making greenback-priced gold more expensive for foreign buyers.