Futures muted as China imposes retaliatory tariffs

US stock index futures were subdued on Tuesday as investors avoided risky assets after China struck back with retaliatory tariffs in response to new US restrictions against Chinese goods.

Minutes after US President Donald Trump's 10 percent tariff on Chinese goods kicked in at 12:01 a.m. ET (0501 GMT), China's finance ministry announced levies on some US imports.

Beijing's limited reply to Trump's imposition of a 10 percent tariff on all imports from China underscored its attempts to engage the US president in talks and avert an outright trade war between the world's two largest economies.

Trump had also imposed a 25 percent tariff on goods from Mexico and Canada over the weekend, but agreed to a 30-day pause in the levies on Monday, in return for border and crime concessions from both countries.

The last-minute change helped the three major U.S. stock indexes pare some of the heavy losses suffered earlier on Monday and closed trading well off session lows.

"The events of the last few days have once again shown that anything can be expected of Trump," Commerzbank economists said in a note. "There is still a high risk that significant tariffs and disruptions in international trade will ultimately occur."

The S&P 500 came as close as eight points to all-time highs on Friday before selling off, as the tariffs rattled global markets.

Three Fed officials warned on Monday that trade tariffs carried inflation risks, with one arguing that uncertainty over the outlook for prices called for slower interest-rate cuts than otherwise.

Traders are pricing in no interest-rate action from the U.S. Federal Reserve before June, with bets on a cut in June at 62 percent, according to CME's FedWatch.

Comments from three Fed leaders including Atlanta's Raphael Bostic are expected through the day.

In economic data, a December job openings reading is due at 10:00 a.m. ET on Tuesday, with the all-important January nonfarm payrolls report slated for Friday.

At 07:24 a.m. ET, Dow E-minis were down 93 points, or 0.21 percent, S&P 500 E-minis were down 3.25 points, or 0.05 percent, and Nasdaq 100 E-minis were up 20.5 points, or 0.1 percent.

Google-parent Alphabet gaming firm Electronic Arts and chipmaker AMD are scheduled to report quarterly earnings after markets close on Tuesday.

Among premarket movers, biotechnology firm Illumina dropped 4.7percent, while PVH Corp, the holding company for brands including Calvin Klein, fell 5.2 percent after China placed the firms in its "unreliable entity list".

PepsiCo fell 2.3 percent after it forecast annual profit below expectations and missed quarterly revenue estimates, as the Frito-Lay maker faces weakening demand for its sodas and snacks in the United States, its largest market.

Spotify gained 8.7 percent after it forecast first-quarter profit above market expectations, while Palantir jumped 21.8 percent after the data analytics company forecast first-quarter and annual revenue above Wall Street estimates.

Merck fell 8.1 percent after the drugmaker said it would pause shipments of Gardasil to China through at least mid-year, as continued weak demand for the HPV vaccine there is expected to hurt the company's 2025 revenue.

Pfizer rose 1.8 percent after it beat estimates for fourth-quarter profit, helped by strong sales of its heart-disease drug and a smaller-than-feared drop in COVID-19 vaccine sales.

REUTERS