U.S. stocks suffered a sharp decline on Monday as President Donald Trump confirmed that new tariffs on imports from Canada and Mexico would proceed, exacerbating market fears of a deepening trade dispute. The S&P 500 fell 1.76% to 5,849.72, marking its worst session since December and turning negative for the year. The Dow Jones Industrial Average lost 649.67 points, or 1.48%, to close at 43,191.24, while the Nasdaq Composite dropped 2.64% to 18,350.19, largely weighed down by an 8% decline in Nvidia shares.
Markets, which had initially traded higher, turned sharply negative in the afternoon following Trump’s statement. Speaking alongside Commerce Secretary Howard Lutnick at the White House, Trump announced that 25% tariffs on Canadian and Mexican imports would take effect on Tuesday, April 2. He also signed an executive action imposing an additional 10% tariff on Chinese imports. “No room left for Mexico or for Canada,” Trump said, confirming there would be no last-minute negotiations to avert the levies.
The announcement triggered a broad sell-off across sectors, with technology stocks and small-cap equities taking significant hits. AI-related stocks, including Broadcom and Super Micro Computer, declined sharply, while the Russell 2000 index, which tracks smaller firms, dropped nearly 3%. Automakers also saw steep losses, with General Motors and Ford hitting session lows, while exchange-traded funds tracking Mexican and Canadian markets each fell more than 1%.
S&P 500 and Nasdaq suffer steep declines on tariff fears
Investor concerns over the economic impact of tariffs have been mounting, especially as recent economic data suggests weakening momentum. Soft figures from the manufacturing and construction sectors released Monday added to fears that the U.S. economy could be entering a slowdown. “Whether the stock market can survive this change remains to be seen,” said Chris Rupkey, chief economist at FWDBONDS, warning that the tariffs could deliver a significant shock to the economy.
The losses extended February’s downturn, during which all three major indexes posted negative returns amid tariff concerns and early signs of economic weakness. The S&P 500 and Dow each lost more than 1% in February, while the Nasdaq Composite had its worst month since April 2024, declining around 4%. The sell-off comes as inflation remains above the Federal Reserve’s 2% target, consumer confidence weakens, and job layoffs increase.
Markets faced further pressure on Tuesday morning as stocks opened lower following Trump’s confirmation that the tariffs would proceed. The Dow shed another 500 points, down 1.16%, while the S&P 500 and Nasdaq lost 1.05% and 0.86%, respectively. In response, China announced retaliatory tariffs on key U.S. agricultural products, including chicken, pork, and beef. Canadian Prime Minister Justin Trudeau also pledged immediate countermeasures, escalating tensions further.
Stock market uncertainty continues ahead of Trump’s address
While some analysts believe the tariffs could be a negotiation tactic, the immediate market reaction has been overwhelmingly negative. “Investors sell first and ask questions later,” said Clark Geranen, chief market strategist at CalBay Investments. The uncertainty over how long the tariffs will remain in place has fueled heightened volatility, with CNN’s Fear and Greed Index signaling “extreme fear” in the markets for the sixth consecutive day.
Trump is set to address Congress later on Tuesday in his first speech of his second term, under the theme “Renewal of the American Dream.” However, with the stock market now having erased all gains since his presidency began and the Federal Reserve Bank of Atlanta forecasting a potential 2.8% contraction in U.S. GDP, investors remain on edge about the economic trajectory. – By MENA Newswire News Desk.