Tuesday was the start of Trump’s tariffs on Canada and Mexico and additional tariffs on China.
The sudden trade war pushed major US indexes into negative territory for the year.
Big slides in the S&P 500, the Nasdaq, and the dollar were among Tuesday’s jarring market moves.
President Donald Trump’s latest tariffs have triggered a flurry of losses for investors, reversing already waning momentum in the US stock market and sparking a decline in the US dollar.
Trump’s 25% duty on most Canadian and Mexican imports went into effect on Tuesday, alongside an additional 10% tariff on goods from China. Energy-related products coming from Canada are subject to a separate 10% duty.
The moves have sparked a full trade war, with Canada and China immediately implementing tariffs on US trade. Mexico said it would follow on Sunday.
For investors, the sudden trade drama is dashing any remaining risk-on sentiment, as tit-for-tat restrictions feed into already high levels of macroeconomic uncertainty.
Here are three striking market moves on day one of Trump’s tariff enforcement.
The benchmark S&P 500 index has shed all gains achieved after Trump’s election win in November.
It was down by about 1% on Tuesday afternoon. It traded as low as about 5,732, below its closing level of 5,783 on Election Day.
The so-called Trump bump was spurred by postelection enthusiasm for Trump’s pro-growth policies, including tax cuts and deregulation.
While tariffs were also a cornerstone of Trump’s platform, concerns about a trade war failed to halt the S&P 500’s bull run, which took the index more than 7% higher from November to mid-February.
The sell-off had slowed by early afternoon, with the index clawing back some of the morning’s losses.
Moves in the Nasdaq Composite are a clear indicator of the risk-off shift in stocks as investors flee some of the biggest tech winners of the past two years.
The tech-heavy index dropped by as much as 2% on Tuesday morning, hitting an intraday low of 17,956. The index regained some ground, but a close below 18,156.50 would put it into correction territory, marking a 10% drop from its high on December 16. It’s down by almost 5% in the year to date.
The Nasdaq’s steep falloff in previous days can also be attributed to jitters in dominant tech stocks. The chipmaker Nvidia shed 8% on Monday following concerns about its earnings and trade with China.
The trade war is creating unexpected waves in the US greenback, an asset that had been seen as a winner of Trump’s protectionist policy.
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