Major stock market indices opened the week down significantly after President Donald Trump announced tariffs on Canada, China, and Mexico.
The Dow Jones Industrial Average fell nearly 500 points, or about 1%. The S&P 500 dropped 1.5%, while Nasdaq 100 lost 2%. The Russell 2000, which represents smaller firms, lost about 1%. The Cboe Volatility Index, known as Wall Street’s “fear” gauge that anticipates major market swings, spiked above 19.
On Saturday, Trump announced 25% tariffs on all goods imported from Canada and Mexico — America’s two largest trade partners — with a carve-out of 10% levies on Canadian energy imports. He also announced a 10% levy on all goods coming from China. Late Sunday, Trump acknowledged there could be some “pain” for U.S. consumers as a result of the tariffs but said it would be “worth the price.” They were set to take effect Tuesday.
Shares in auto firms, many of which rely on production facilities in Mexico and Canada, saw significant declines: General Motors’ stock was down as much as 7%, while Ford was down as much as 4%.
Other major consumer firms selling off included Chipotle, Nike, Lululemon and alcohol distributor Constellation Brands.
Bitcoin and other cryptocurrencies — which remain tied to investor risk-taking behavior — also saw large draw-downs, though some analysts suggested it represented a buying opportunity.
Gold climbed to a record $2,818.27 per ounce.
Mexican goods that will now likely get pricier to bring into the U.S. include fresh produce, beer, liquor and some electronics; from Canada: potatoes, grains, lumber and steel.
There was disagreement among Wall Street analysts about the expected duration of the tariffs. Goldman Sachs researchers released a note Sunday saying that while the outlook was unclear, the tariffs were “likely to be short-lived” given the vague language of the White House’s conditions — curtailing immigration and fentanyl shipments — for removing them, and the potential economic effects from a long-term imposition.
Another set of Goldman forecasters warned U.S. stocks could see more meaningful declines if investors “reassess their assumptions about the risks that the administration is willing to take with the growth and inflation outlook.”
J.P. Morgan agreed, saying Trump may have set off a new cycle of volatility.
“Even if tariffs are called off tomorrow, the increase in policy uncertainty will be hard to put back in the bottle,” they wrote in a note.
Canada and Mexico threatened retaliatory measures on U.S. goods; early Monday, Ontario Premier Doug Ford announced a ban on his province signing new contracts with U.S. firms.
Some analysts said Canada and Mexico’s economies were now likely to see significant growth slowdowns, with Morgan Stanley forecasting an outright recession for the Mexican economy; Mexico ships almost 83% of its exports to the U.S., according to estimates cited by Reuters.
Some GOP officials said the tariffs represented negotiating tactics. Sen. Eric Schmitt, R-Mo., told “Meet the Press” moderator Kristen Welker, “I think these tariffs specifically, Kristen, are meant to bring Canada and Mexico to the table for the fentanyl that is streaming into our communities.”
He added: “The fact is these countries are taking advantage of us all along the while we’ve got fentanyl streaming into our country. So Mexico has a choice. They can choose to trade with the United States or continue to cozy up with the cartels. It’s pretty simple.”
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