On Monday, traders at the New York Stock Exchange saw major stock market indices begin the week on a downward trend following President Donald Trump’s announcement of tariffs on Canada and China. However, later in the morning, Trump stated that duties against Mexico would be put on hold. The Dow Jones Industrial Average managed to recover from its early losses, narrowing down to less than 100 points by noon. The S&P 500 experienced a 0.5% drop, while the Nasdaq 100 lost 1%. The Russell 2000, representing smaller firms, also saw a decrease of 0.7%. The Cboe Volatility Index, known as Wall Street’s indicator of major market swings, rose above 17.
Over the weekend, Trump declared 25% tariffs on all goods imported from Canada and Mexico, the two largest trade partners of America, with a 10% levy specifically on Canadian energy imports. Additionally, a 10% tariff was announced on goods from China. Trump acknowledged that there could be some negative effects on U.S. consumers due to the tariffs but deemed it as a necessary action. The tariffs were set to take effect on Tuesday.
Shares in auto companies, particularly those reliant on production facilities in Mexico and Canada, experienced significant declines. General Motors’ stock dropped by as much as 7%, while Ford saw a decrease of up to 4%. Other major consumer firms, such as Chipotle, Nike, Lululemon, and Constellation Brands, also witnessed sell-offs. Bitcoin and other cryptocurrencies, closely tied to investor risk sentiment, faced notable declines, although some analysts viewed it as a buying opportunity.
Gold prices surged to a record high of $2,818.27 per ounce. Mexican goods that were expected to become more expensive for import into the U.S. included fresh produce, beer, liquor, and certain electronics, while Canadian goods affected included potatoes, grains, lumber, and steel.
Some GOP officials interpreted the tariffs as negotiation tactics. Senator Eric Schmitt of Missouri stated on “Meet the Press” that the tariffs were aimed at compelling Canada and Mexico to address the issue of fentanyl entering the U.S. He emphasized the need for these countries to either engage in trade with the U.S. or refrain from aligning with drug cartels.
