Investing.com-- U.S. stock index futures fell on Monday evening after President-elect Donald Trump threatened to impose higher import tariffs on China, Canada and Mexico on concerns over illegal drugs and immigration.

S&P 500 Futures fell 0.3% to 5,989.75  points, while Nasdaq 100 Futures fell 0.3% to 20,817.75 points by 19:03 ET (00:03 GMT). Dow Jones Futures fell 0.3% to 44,707.0 points. 

Futures reversed initial gains after Trump’s threat, which cut short momentum from a positive session on Wall Street. U.S. stock benchmarks hit record highs on Monday as investors cheered the nomination of Scott Bessent as Treasury Secretary, while flows into cyclical sectors persisted.

Risk appetite was also supported by reports that a ceasefire between Israel and Lebanon was close, which saw oil prices fall sharply. 

Trump threatens more tariffs 

Trump said in a social media post that he will impose an additional 10% tariff on all Chinese imports, citing a lack of progress on China’s part towards curbing the flow of illegal drugs into the U.S.

His threat follows promises during his campaign that he will impose a 60% tariff on all Chinese goods.

Additionally, Trump also said he will impose a 25% tariff on all imports from Canada and Mexico over inflows of allegedly illegal immigrants and drugs into the U.S. through open borders with the two countries.

Trump’s tariff threats ramped up concerns over a renewed global trade war between the world’s biggest economies- a trend seen through much of his first term. Such a scenario bodes poorly for global trade, especially for countries with heavy trade exposure to the U.S.

The dollar and Treasury yields surged on Trump’s tariff threats. 

Wall St hits record highs on Treasury nomination 

Losses in Wall Street futures came after a positive session on Monday, after Trump’s nomination of Bessent was welcomed by investors.

Bessent- a seasoned investor- is expected to push for more tax reforms for U.S. firms, and is also expected to have a more moderate view on trade tariffs. 

Wall Street was also buoyed by a steady pivot into economically sensitive sectors, as markets bet on more expansionary policies under a Trump administration.

The Dow Jones Industrial Average was an outperformer among its peers, rising 1% to a record high of 44,746.57 points on Monday. The S&P 500 rose 0.3% to 5,987.37 points, while the NASDAQ Composite rose 0.3% to 19,054.89 points. 

Trading volumes are expected to be muted this week, on account of the Thanksgiving holiday. 

But focus is also on key upcoming economic data, with PCE price index data- the Federal Reserve’s preferred inflation gauge- due on Wednesday.