U.S. stock indices closed higher on Monday as investors digested a mix of corporate earnings previews, chip-sector news and an abrupt trade escalation announced by President Donald Trump. The Nasdaq, Dow and S&P all posted gains driven by optimism around impending quarterly reports from Apple, Microsoft and Meta Platforms, even as some large-cap chips and auto suppliers weakened.
On the policy front, Mr. Trump declared on his social platform that the United States would lift duties on South Korean autos, timber and pharmaceutical imports — along with other “reciprocal tariffs” — from 15% to 25%, citing Seoul’s failure to secure parliamentary approval for a previously negotiated trade pact. The White House message framed the increase as punishment for the South Korean legislature’s inaction on an agreement Mr. Trump says he struck with President Lee Jae-myung in July 2025 and reconfirmed during an October state visit.
Markets reacted unevenly. Big tech names such as Apple, Meta and Microsoft rose on expectations of strong results and, in Microsoft’s case, an announcement that it has fielded a new custom AI inference chip, Maia 200. The new chip—built on TSMC’s 3nm node with native FP8/FP4 tensor cores—was touted by Microsoft as outperforming Amazon’s Trainium and Google’s seventh‑generation TPU on certain low‑precision inference workloads.
Hardware winners and losers diverged sharply. Cisco, Oracle and Meta traded higher, while Intel plunged after offering a dour revenue outlook for the first fiscal quarter of 2026, and AMD, Tesla and Micron also sold off. The broad banking sector rallied, reflecting an ongoing rebound in financials, but healthcare insurers swung sharply lower in aftermarket trading following a White House proposal to leave 2027 Medicare payment rates to insurers unchanged.
Chinese ADRs were mostly down, pulling the Nasdaq Golden Dragon index lower, with notable declines in autonomous driving and education-related names, though several cloud and data-centre plays recorded strong gains. In commodities, precious metals saw a dramatic intraday surge before retracing: silver spiked more than 14% briefly, and spot gold struck a record high above $5,100 an ounce before settling back nearer $5,010.
The tariff move, if implemented, would mark a sudden tightening of U.S. trade policy with a key ally and major exporter of autos, electronics and pharmaceuticals. Beyond the immediate price and profit implications for affected U.S. importers, higher duties could strain supply chains that tightly integrate South Korean components—most notably in the automotive and semiconductor ecosystems—into U.S. manufacturing and retail lines.
For markets, the headlines inject an extra layer of geopolitical risk into an already complex earnings season. Tech investors are weighing the promise of in‑house AI silicon and an anticipated wave of strong quarterly reports against idiosyncratic setbacks at firms such as Intel and broader macro and policy risks. For South Korean exporters and global manufacturers, a unilateral U.S. tariff increase raises questions about trade predictability and the potential for retaliatory measures.
The administration’s move also has a political dimension: escalating tariffs can be a lever to press foreign governments to ratify bilateral deals or to score points on domestic industrial-policy themes. How Seoul responds will determine whether this becomes a short-lived bargaining posture or the opening act of a deeper trade dispute with real economic consequences for global supply chains.