US stock futures are on shaky ground as leading indices are trending lower after opening in green on Tuesday. Nasdaq Composite futures and S&P 500 futures recovered while Dow futures are down slightly. The latest on Trump’s trade war has bad news for the markets as markets struggle to understand the full impact.

China’s Finance Ministry has announced duties of 15% on US coal and LNG, and 10% on crude oil, farm equipment, a small number of trucks, and large-engine cars exported to China from the US, in a move to counter Trump’s tariff plan.

Trump’s executive order imposing tariffs on Canadian, Mexican, and Chinese imports caused the U.S. dollar to surge, while stocks in Europe, Asia, and the U.S. tumbled. New levies were set to take effect on Tuesday, but Mexican President Claudia Sheinbaum announced a deal with Trump to delay tariffs by one month, and Canada to pause tariffs for 30 days.

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The markets recovered from the lows on Monday but investors should probably get used to swings like this. The Dow dropped 0.28%, while the S&P 500 and Nasdaq Composite lost 0.76% and 1.2%, respectively.

However, now China has imposed tariffs on US imports in response to US duties on Chinese goods, reinforcing a trade war between the two economies due to Trump’s punishment for China’s drug trafficking.

“In the business world, the rearview mirror is always clearer than the windshield” is a famous quote by the legendary investor, Warren Buffett. Looking back, it appears, that investors experienced low volatility in 2023 and 2024, with the US markets delivering 20% returns each year.

In 2025, Trump’s entry signifies a shift in the anticipated level of market volatility. The kind of U-turn markets experienced on Monday could likely be the norm for the rest of the year. The message for investors: Be prepared for a rough ride, so buckle up.

Trump claims tariffs are necessary to curb illegal drug and immigration flow into the US, aiming to decrease the flow of opioid fentanyl and migrants.

The concern for the investors is that tariffs could negatively impact US industries and potentially increase inflation, potentially preventing the Fed from lowering interest rates this year.

Tariffs are expected to cause market volatility and overhang in the coming weeks unless investors gain clarity on the US trade policy’s direction.

Nvidia stock price fell amid Trump administration’s tariff announcement, causing global trade war concerns and potential countermeasures on American AI chips. On Monday, Nvidia recovered yet closed 2.84$ lower than the previous day’s close.

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On Tuesday, gold rose above $2,810 per ounce, lingering near a record high set the previous session, boosted by safe-haven demand amid global trade uncertainty. The inflationary impact of tariffs could further bolster gold’s appeal as a hedge against price pressures and geopolitical uncertainty. However, this may also lead to higher interest rates, posing a challenge for non-yielding bullion. The MCX gold price in India opened flat but immediately fell to an intraday low of Rs 83,125 per 10 grams.