By Medha Singh
(Reuters) -Automakers, beer firms, and nuclear power companies led declines in a broad equity pullback on Monday after the U.S. hit Mexico, Canada and China with sweeping tariffs, stoking worries of a trade war that could cripple growth and corporate profits.
Investors flocked to the perceived safety of U.S. Treasuries and the dollar as the countries, the top three trading partners accounting for more than $2.1 trillion in annual two-way U.S. trade, vowed to retaliate, threatening to upend global supply chains.
General Motors slid 7.4%, Ford dropped 4% and Tesla shed 3.1% in premarket trading while Corona beer maker Constellation Brands tumbled 6%.
U.S.-listed shares of Chinese e-commerce firms declined, with PDD Holdings, parent of Temu, down 5.5%. The broader iShares China large-cap ETF slipped 1.6%.
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 U.S.
"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 tariffs. The Russell 2000 futures slumped 2.1%, 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, Microsoft, Apple and Amazon were all down between 1.3% and 1.9%.
HIGHER INFLATION, LOWER PROFITS
The tit-for-tat tariffs could eat into company profits, raise consumer prices and prompt the Federal Reserve to rethink on easing its monetary policy, endangering a rally that propelled U.S. stocks to record highs last month.
If the sweeping tariffs were sustained, Goldman Sachs estimated that it would reduce its S&P 500 earnings forecasts by between 2% and 3%, although the brokerage believes the duties on Canada and Mexico are likely to be temporary.
Uranium miners in U.S. and Canada fell, with Cameco Energy down 2.6% and Energy Fuels 1.9%. Canada supplied 27% of uranium to U.S. utilities in 2023, according to data from the U.S. Energy Information Administration data.
Nuclear-energy power providers such as Vistra and Constellation Energy shed 6.2% and 4.2%, respectively.