Stocks drop for a second day as US tariffs take effect, with Canada, Mexico, and China hitting back
On Tuesday, the Dow Jones Industrial Average fell for a second consecutive day as US President Donald Trump’s tariffs unsettled investors.
According to CNBC, the blue-chip index dropped 670.25 points, or 1.55 percent, closing at 42,520.99.
This decline followed Monday’s nearly 650-point drop. The S&P 500 lost 1.22 percent, closing at 5,778.15, while the Nasdaq Composite slipped 0.35 percent to 18,285.16.
At their lowest points, the Dow fell more than 840 points, and the S&P 500 slid 2 percent.
The Nasdaq dropped more than 2 percent at its lowest level, briefly approaching correction territory—a term for a 10 percent decline from a recent high.
More than 80 percent of S&P 500 stocks closed lower, though some investors purchased shares of companies like Nvidia, which have been hit hard this year.
Tuesday’s drop followed Trump’s implementation of 25 percent tariffs on imports from Canada and Mexico, which took effect at midnight. He also imposed an additional 10 percent tariff on Chinese goods.
China responded with retaliatory tariffs of up to 15 percent on some US products.
Mexican President Claudia Sheinbaum stated that Mexico would also introduce tariffs and additional countermeasures, with details expected this weekend.
Prime Minister Justin Trudeau confirmed that Canada would impose a 25 percent levy on US goods.
In response, Trump threatened even higher tariffs on Canada.
Concerns over escalating trade tensions weighed heavily on stocks of companies reliant on imports.
GM and Ford shares fell more than 4 percent and nearly 3 percent, respectively.
Chipotle, which sources about half of its avocados from Mexico, slipped 2 percent. Target declined 3 percent, with its CEO warning that produce prices would increase in the coming days due to the tariffs.
The week’s losses erased the S&P 500’s gains for 2025 and left the Dow flat for the year.
Investors had anticipated a potential last-minute deal to prevent the tariffs, but losses accelerated on Monday after Trump confirmed the levies were moving forward.
“I’m calling it a conditional correction,” said Sam Stovall, chief investment strategist at CFRA Research. “It’s really based on one condition: By how much Trump is going to retain the tariffs.”
Alongside weak economic data released in recent weeks, the tariffs added to concerns about US economic growth. Bank and retail stocks were among the hardest hit, as investors feared the levies could further slow the economy.
With Tuesday’s losses, the S&P 500 fell below its closing level on Election Day in November, when Trump won his second term.
Traders watched Trump’s address to Congress last Tuesday night for any statements on the tariffs, which were a key part of his campaign platform.
