US Stocks Tumble Amid Anticipation of New Tariffs

US stocks took a hit on Monday as investors prepared for the midnight implementation of President Donald Trump’s proposed tariffs on Canada and Mexico.

The Dow Jones Industrial Average plummeted 650 points, or 1.48%, to close at 43,191. Earlier in the day, the Dow had dropped nearly 900 points before slightly recovering. The S&P 500 fell by 1.76%, while the Nasdaq Composite saw a sharper decline of 2.64%.

The S&P 500 experienced its steepest single-day decline of the year. Since Trump assumed office on January 20, the Nasdaq has decreased by around 6.5%.

During a White House press conference, Trump detailed the incoming tariffs: “Tomorrow, tariffs — 25% on Canada and 25% on Mexico,” he said. “What they need to do is build their car plants and other operations in the United States, avoiding tariffs altogether.”

Trump mentioned that there was “no room” left for negotiation with the trading partners to avert the tariffs, framing them as a measure to “punish” countries he believes were exploiting the US economy.

“They’re all set. They go into effect tomorrow,” Trump declared.

In addition, Trump signed an executive order raising tariffs on Chinese imports from 10% to 20%. He claimed these tariffs were intended to pressure China into limiting the flow of fentanyl into the United States.

Wall Street’s fear gauge, the VIX, soared to its highest level of the year following Trump’s remarks.

“The uncertainty surrounding the tariffs has erased gains from the ‘Trump bump’ post-election, and the anticipated price pressures are causing investors to hesitate,” said Gustavo Flores-Macias, a government and public policy professor at Cornell University.

“2025 might still offer a positive outlook for stocks, but investors should prepare for a gradual realization of gains, which may ultimately be modest,” stated Gina Bolvin, president of Bolvin Wealth Management Group.

Bolvin added, “I remain optimistic about future market potential.”

Trump’s newly imposed import taxes are the largest in the history of US-China relations. The initial tariffs, implemented on February 4, targeted $1.4 trillion in imports, more than tripling the $380 billion worth of goods affected during Trump’s first term, according to the Tax Foundation.

Trump had previously pledged a 60% tariff on all Chinese goods, potentially indicating further increases.

At the press conference, Commerce Secretary Howard Lutnick suggested that global companies could sidestep tariffs by investing in US-based production, citing the Taiwanese company TSMC’s $100 billion investment in the country announced on Monday.

According to analysts at Goldman Sachs, these tariffs will raise the price of imported goods, potentially increasing demand for US-produced goods. However, they warned of negative repercussions for some US businesses.

“Tariff hikes will also inflate production costs for domestic producers and may provoke foreign retaliation against US exports, thereby detrimentally affecting local production,” they noted.

“We’re likely to see continued stock market volatility until Trump’s policies adopt a focus on growth,” commented Jason Draho, head of asset allocation for the Americas at UBS Global Wealth Management in a Monday note.

Draho maintains a “positive medium-term outlook,” anticipating future growth.

The market began its downturn on Monday as investors reviewed the latest manufacturing survey from the Institute for Supply Management, which showed slowed economic activity within the manufacturing industry, though it remained in expansion territory. Concerns over tariffs were prevalent in survey responses.

The downturn continued in the afternoon as Trump announced on Truth Social his intent to impose tariffs on “external products,” potentially affecting agricultural products. According to an informed source, these reciprocal tariffs are planned for April 2, though implementation specifics were uncertain.

“To the Great Farmers of the United States: Prepare to start selling a lot of agricultural products domestically,” Trump wrote. “Tariffs on external products begin April 2nd. Enjoy!”

Following Trump’s tariff confirmation, CNN’s Fear and Greed Index indicated that market sentiment dipped into “extreme fear.”

Among the stocks hit hard on Monday was Nvidia, which fell by 8.7%.

The yield on the 10-year Treasury dropped to 4.16%, reflecting concerns about economic uncertainty and growth prospects.

Bitcoin traded around $85,600 on Monday afternoon, down 8.6% over the past day, losing gains following Trump’s Sunday announcement of a strategic crypto reserve that includes Bitcoin.

Conversely, shares in European defense companies reached new heights on Monday as leaders discussed rearming efforts amid diminished US support for Ukraine.

WTI crude oil, the US benchmark, decreased by about 2% to its lowest rate since December after OPEC+ announced it would ramp up production starting in April.

CNN journalists Elisabeth Buchwald, Matt Egan, David Goldman, Bryan Mena, and Vanessa Yurkevich contributed to this report.