US stocks slid Monday as investors braced for President Donald Trump’s proposed tariffs on Canada and Mexico to go into effect by the midnight deadline.
The Dow tumbled 650 points, or 1.48%, to close at 43,191. The Dow fell almost 900 points in afternoon trading before pulling back slightly. The broader S&P 500 fell 1.76% and the Nasdaq Composite fell 2.64%.
The S&P 500 posted its biggest one-day decline of the year. The Nasdaq is down about 6.5% since since Trump took office on January 20.
“Tomorrow, tariffs — 25% on Canada and 25% on Mexico,” Trump said during a press conference at the White House. “And that’ll start. … 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.”
Trump said the two trading partners had “no room” left to negotiate to avoid the levies and that he was using tariffs to “punish” countries that, as he put it, were taking from the US economy without giving enough in return.
“They’re all set. They go into effect tomorrow,” he said.
Canadian Prime Minister Justin Trudeau said Ottawa would immediately respond with tariffs on $30 billion of US goods if the Trump administration’s measures go into effect.
“Canada will not let this unjustified decision go unanswered,” he said in a statement.
Trump also signed an executive order on Monday raising tariffs on imports from China to 20%, up from 10%. Trump said the tariffs, aimed at bringing China to the table on curtailing fentanyl entering the United States, will be raised because Beijing has not done enough to stem the flow of illegal drugs.
The VIX, Wall Street’s fear gauge, surged to its highest point this year after Trump’s comments.
“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,” said Gustavo Flores-Macias, a professor of government and public policy at Cornell University.
“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,” said Gina Bolvin, president of Bolvin Wealth Management Group.
“I’m still a bull,” Bolvin said.
The import taxes Trump imposed are significant — the largest in US-China history. The initial tariffs, which went into effect February 4, set in motion tariffs on $1.4 trillion of imported goods. That’s more than triple the $380 billion worth of foreign goods that were hit with tariffs during Trump’s first term, according to estimates from the Tax Foundation.
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A spokesperson for China’s Ministry of Commerce said Tuesday the country was “strongly dissatisfied” and “firmly opposed” the additional tariff.
“(China) will take countermeasures to firmly safeguard its own rights and interests,” the spokesperson added in a statement.
Before he became president, Trump pledged a 60% tariff on all Chinese goods, so the tariff level could rise still.
Commerce Secretary Howard Lutnick said at the press conference about tariffs on Canada and Mexico that global companies can avoid tariffs if they invest into production in the United States, like TSMC, the Taiwanese chipmaker at the White House on Monday to announce a $100 billion US investment.
Trump’s tariffs will raise prices of imported goods, which could boost demand for goods produced in the US, according to analysts at Goldman Sachs. But they also noted that tariffs will have negative effects on some American businesses.
“Tariff increases will also raise production costs for some domestic producers and will likely prompt foreign retaliation against some US exports, both of which could hurt domestic production,” they wrote in a note.
US stocks are “likely to be volatile” until Trump’s policies point toward being more growth-focused, said Jason Draho, head of asset allocation for the Americas at UBS Global Wealth Management, in a note Monday.
Draho said he does expect future growth and maintains a “positive medium-term outlook.”
The stock market began to slide Monday morning to begin the new month, as investors digested the latest manufacturing survey from the Institute for Supply Management. The survey showed economic activity in the manufacturing industry remained in expansion territory, yet slowed last month. Tariff fears dominated write-in responses to the survey.
Markets slid Monday afternoon after Trump posted on Truth Social that he plans to implement tariffs on “external product[s],” potentially including agricultural products. Trump’s post referred to his plan for reciprocal tariffs, set to take place on April 2, according to a person familiar, though it was not immediately clear how these tariffs would be implemented.
“To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!” Trump said in the post.
The sentiment driving markets on Monday dipped into “extreme fear” after Trump’s confirmation that tariffs will go into effect on Tuesday, according to CNN’s Fear and Greed Index.
The stocks dragging markets lower on Monday included Nvidia (NVDA), which fell 8.7%.
The yield on the 10-year Treasury slid to 4.16%, signaling concerns about uncertainty and future economic growth.
Bitcoin traded around $85,600 on Monday afternoon, down 8.6% in the past day and largely erasing gains made after Trump on Sunday announced a strategic crypto reserve that would include bitcoin.
Meanwhile, shares in defense companies in Europe soared to record highs on Monday as European leaders consider the need to re-arm amid less US support for Ukraine.
WTI crude, the US oil benchmark, fell about 2% to its lowest price since December after OPEC+ announced it would begin producing more oil in April.
CNN’s Elisabeth Buchwald, Matt Egan, David Goldman, Bryan Mena, Hassan Tayir, Paula Newton and Vanessa Yurkevich contributed reporting.
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