Dow Jones futures point to a negative opening after the latest Tariff threats

• Equity markets fall as Trump increases tariffs on the EU, Mexico, and Canada
• Concerns that higher import costs will heat inflation and weigh on growth are weighing on investors' appetite for stocks.
• Fed's Goolsbee warned on Friday that higher tariffs put further rate cuts into question.

Wall Street is expected to open the week in the same negative tone that closed the previous one. Trump's threat to impose 30% tariffs on Europe and Mexico and 35% levies on Canada, three of its major trading partners, crushed risk appetite and sent most equity indexes tumbling.

The Dow Jones Industrial Average is showing the largest decline, with DJIA futures 0.63% down during the early European session. Futures of the S&P 500 Index drop 0.33% while Nasdaq Technology Index futures are posting losses of 0.22%.

New tariff threats weigh on risk appetite

These tariffs are higher than the 20% tariffs imposed on the EU on April 2, Liberation Day, or the 25% levies announced for Canada and Mexico. The reaction from the targeted countries, however, has been contained so far. Investors remain hopeful that trade deals are still possible, which is limiting the risk-averse reaction.

Concerns that higher prices on imports will heat inflation and might cause supply chain disruptions are weighing on investors' appetite for imports ahead of the US Consumer Prices Index release, due on Tuesday, which might give further insight about the Federal Reserve's monetary policy plans.

The market is pricing two rate cuts in the second hald of the year, the first of them coming in September, but the strong US employment figures seen earlier this month and the higher roisks for inflation stemming from trade tariffs might prompt the Fed to adopt a more cautious view, which is likely to weigh on stocks.

On Friday, Chicago Fed President Austan Goolsbee warned that the new round of tariffs would muddle the outlook on inflation and pose additional challenges for policymakers to support the rate cuts the US president is calling for.