Stock markets have been struggling through two days of selling after President Trump pushed forward with sudden new tariffs on Canada and Mexico.
The Dow Jones industrial average was closed on Tuesday with a loss of 670 points (1.6%) as Trump's 25% tariffs on Canadian and Mexican goods came into effect. Trump also increased tariffs on Chinese goods by 10 percentage points, adding the import tax rate set during his initial control, and was maintained by former President Biden.
The S&P 500 index lost 1.2% that day, while the Nasdaq composite closed 0.4% lower.
Tuesday marked a stock market's second-day straight loss, with Trump backing his plan on Monday, marking a significant increase in import taxes for the two closest economic partners.
The Dow has lost more than 1,300 points since Monday, and the S&P 500 has dropped by more than 3% in the last five days, wiping out profits since Election Day.
Stock slides are the latest signal of economic concerns after weeks of declining consumer sentiment among business leaders about the impact of Trump's tariffs, causing weeks of consumer sentiment, inflation and deepening fears among business leaders.
“We've been saying for a while it's time to prepare for a bigger pullback. Time can be thin here. The job market is under a lot of pressure, and that pressure can start to get worse with federal layoffs and job freezes.”
“It's time to be nervous. Not bearish, I'm nervous,” she continued. “There is not enough evidence to believe we are at the pinnacle of a deep pull, but the economy is changing rapidly. The fact that we are moving forward with growth is even more skeptical in the coming months.”
Tariffs affect imports of more than $1 trillion. The trio country exported a total of $1.4 trillion in goods to the United States in 2022, and in that year more than 5% of its gross domestic product (GDP).
The US imports billions of dollars worth of agricultural products, energy, auto parts, wood and other important goods from Canada and Mexico. The economies of all three countries have been deeply integrated in the 30 years since the establishment of the North American Free Trade Agreement, which was renewed under the US-Mexico-Canada Agreement (USMCA) under Trump.
Canadian Prime Minister Justin Trudeau said his country would impose a 25% tariff on US goods, and that the Canadian province's leader has pledged to retaliate against US Mexican President Claudia Shainbaum.
Trump claimed on Monday there was no space left for Canada and Mexico to get out of the new tariffs, but Commerce Secretary Howard Lutnick announced there was a breakthrough along the way.
In an interview with Fox Business shortly after the stock market was shut down, Lutnick said Trump was discussing potential compromises with Canadian and Mexican officials that could be announced Wednesday.
“I think he'll work out something with them,” Lutnick told Larry Kudrow, a business host at Fox and former official official of the Trump administration's economy.
He said, “It's not going to be a pause – there's no pause, but he understands more and you think you'll do more. There's a good chance somewhere along the way will have a result, the president is moving alongside Canadians and Mexicans, but it's not the case for a long time.”
