The stock market took a significant hit on Monday as President Donald Trump confirmed that tariffs on imports from Mexico and Canada would go into effect at midnight. The Dow Jones Industrial Average tumbled 650 points, or 1.48%, to close at 43,191. The broader S&P 500 fell 1.76%, posting its biggest one-day decline of the year, while the Nasdaq Composite dropped 2.64%.
During a White House press conference, Trump stated, “Tomorrow, tariffs — 25% on Canada and 25% on Mexico. What they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs.” He added that the two trading partners had “no room” left to negotiate and that he was using tariffs to “punish” countries that were taking from the US economy without giving enough in return. Canadian Prime Minister Justin Trudeau responded by announcing that Ottawa would immediately impose tariffs on $30 billion of US goods if the Trump administration’s measures go into effect.
Markets react to trump’s tariffs
“Canada will not let this unjustified decision go unanswered,” he said in a statement. Trump also signed an executive order raising tariffs on imports from China to 20%, up from 10%, citing Beijing’s failure to stem the flow of illegal drugs, particularly fentanyl, into the United States.
Gustavo Flores-Macias, a professor at Cornell University, commented, “Due to the uncertainty surrounding the tariffs, the stock market has erased the gains from the ‘Trump bump’ following the presidential election and the expected upward pressure on prices is giving investors pause.”
Gina Bolvin, president of Bolvin Wealth Management Group, noted, “For investors, 2025 can still be a positive year for stocks, but it may take all year to realize gains. And they may be modest.”
The market slide began Monday morning as investors digested the latest manufacturing survey from the Institute for Supply Management, which showed slowing economic activity in the manufacturing industry, with tariff fears dominating write-in responses. Trump’s announcement caused significant market reactions, with Nvidia falling 8.7%, the yield on the 10-year Treasury sliding to 4.16%, and Bitcoin trading around $85,600, down 8.6% on the day.
Meanwhile, shares in European defense companies soared as European leaders consider re-arming amid less US support for Ukraine. WTI crude, the US oil benchmark, fell about 2% after OPEC+ announced it would begin producing more oil in April.
