Trump pauses tariffs but markets are still wary

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

The tariffs are not happening immediately — at least for Mexico and Canada. In what appeared to be another successful deal negotiated by U.S. President Donald Trump, the two countries agreed to ramp up their border protection, leading to a pause in tariffs.

Markets heaved a sigh of relief and made sharp turnarounds on the news. But persistent jitters about long-term uncertainty kept stocks from having a positive day. Trump’s comments on Sunday that he agreed with the U.S. Federal Reserve’s decision to keep interest rates unchanged could have also watered down investors’ expectations (however far-fetched) for lower rates.

Alphabet’s earnings, releasing later today, might attract the most attention, but in the current Trump-dominated context, it’d be interesting to see how Toyota Motor and Ford, which report earnings Wednesday, talk about — or around — how tariffs will affect their businesses.

Trump tariffs on hold
U.S. President Donald Trump on Monday agreed to pause tariffs on Canada for at least 30 days, Prime Minister Justin Trudeau said in a post on X. Trudeau’s announcement came hours after Mexico President Claudia Sheinbaum disclosed on X that Trump was holding off tariffs on its exports for one month. The delay comes after the two countries agreed to take steps toward preventing the trafficking of fentanyl into the U.S.

Markets stage comeback but still in the red
All major U.S. indexes ended Monday in the red. The Dow Jones Industrial Average retreated 0.28%, paring losses of 1.5% earlier in the day, after news of the tariff pause broke. The S&P 500 slid 0.76% and the Nasdaq Composite slumped 1.2%.  Europe’s regional Stoxx 600 index dropped 0.87%. Auto stocks such as Volkswagen, Porsche and BMW were among the biggest losers, though they recovered from steeper falls earlier.

U.S. sovereign wealth fund
Trump signed on Monday an executive order that outlines plans for a U.S. government-run sovereign wealth fund. While it aims to develop infrastructure such as airports and highways, it could also help the U.S. extend its influence in areas such as Panama and Greenland and even be used to buy TikTok.

‘Right thing to do’ — steady rates
In an apparent change of mind, Trump said the U.S. Federal Reserve holding interest rates between 4.25% and 4.5% at its January meeting “was the right thing to do.” The statement stood in stark contrast to one Trump delivered when speaking remotely to the World Economic Forum in Davos, Switzerland. In a Jan. 23 appearance, Trump said he would “demand that interest rates drop immediately.”

Investors pour into Palantir
Palantir shares surged as much as 24% in extended trading on Monday after the software company reported fourth-quarter earnings and revenue that beat estimates. Quarterly revenue rose 36% from a year earlier to $828 million. For the full year, sales increased 29%. Along with the fourth-quarter beat, Palantir offered better-than-expected guidance for the full year. CEO Alex Karp attributed much of the company’s growth to its use of artificial intelligence.

[PRO] A Trump tariff ‘template’?
Markets may have picked up after news broke that Trump was holding off tariffs for now, but they still closed the day lower. Analysts are similarly cautious about how Trump will deploy tariffs in the future — even if they are a “template” for deals, other countries could push back more forcefully and spark big moves in stocks in either direction.

As markets buckle up for Trump tariffs, these global sectors brace for a rough ride

Should Trump’s tariffs go ahead after their 30-day pause lapses, analysts expect a spike in oil prices in the short term, higher prices for U.S. consumers and higher-for-longer U.S. interest rates, with a stronger U.S. dollar as a result. Globally, economic growth will be slower in the short- to medium-term, particularly in countries with large manufacturing sectors. Automotives, chip firms, consumer goods and Chinese e-retailers are among the sectors that will face the largest impact.

Read more