The S&P 500 and Dow Jones Industrial Average closed lower on Tuesday as trade tensions intensified following US President Donald Trump’s implementation of new tariffs on Canada, Mexico, and China.
Trump’s 25% tariffs on imports from Mexico and Canada, along with a doubling of duties on Chinese goods, took effect at midnight.
In response, China and Canada imposed retaliatory tariffs, while Mexican President Claudia Sheinbaum vowed to follow suit, though she did not provide specifics.
The Dow tumbled for a second straight day, reflecting investor concerns over potential economic fallout.
The blue-chip index dropped 670.25 points (1.6%), extending Monday’s nearly 650-point decline.
The S&P 500 lost 1.2%, following its worst session of the year, while the Nasdaq Composite fell 0.3%.
Tuesday’s declines pushed the S&P 500 into negative territory for 2025, while the Dow is now nearly flat for the year.
At their intraday lows, the Dow had fallen more than 840 points, the S&P 500 was down 2%, and the Nasdaq had also shed over 2%, briefly flirting with correction territory—defined as a 10% drop from a recent high.
However, some investors sought opportunities in stocks that have faced heavy selling this year, including Nvidia.
Autos, retail, and consumer goods under pressure
The tariffs weighed on companies heavily reliant on North American imports.
Automakers: shares of General Motors and Ford fell more than 4% and 2%, respectively, as concerns mounted over supply chain disruptions.
Retail and consumer goods: Chipotle (CMG), which sources about half of its avocados from Mexico, lost 2%. Target (TGT) declined 3%, with its CEO warning that produce prices could rise in the coming days due to tariffs.
Tech and small-cap stocks: The Russell 2000 index (RUT), which tracks smaller U.S.-focused companies, also declined, reflecting broader economic worries.
Other notable stock movements included Best Buy (BBY.N), which slumped after issuing a downbeat forecast, while Walgreens (WBA.O) jumped on reports that Sycamore Partners is nearing a take-private deal for the pharmacy chain.
Elon Musk’s Tesla experienced a 4% slide due to a decline in sales figures from China.
The markets in turmoil
Market participants had hoped for a last-minute resolution to prevent full tariff implementation, but losses accelerated on Monday after Trump confirmed the levies would proceed as planned.
Soft economic data released in recent weeks has added to investor worries, with bank and retail stocks leading Tuesday’s selloff amid fears that higher tariffs could weigh on economic growth.
With the latest drop, the S&P 500 has now fallen below its Election Day closing level in November, when Trump secured his second term.
Market watchers will be paying close attention to his address to Congress on Tuesday night, where he is expected to discuss the tariffs—a central component of his economic strategy.
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