Stocks plunged on Monday as Wall Street prepared for the impact of new tariffs imposed by President Trump, raising concerns about a potential trade war that could hurt corporate earnings and consumer spending. The Dow Jones Industrial Average dropped 421 points, or 1%, to 44,123 in early trading. The broader S&P 500 fell by 1.5%, while the tech-heavy Nasdaq composite index saw a 1.8% decline.
Over the weekend, President Trump signed an executive order implementing 25% tariffs on imports from Canada and Mexico, along with an additional 10% levy on Chinese goods. Canada swiftly responded with its own retaliatory tariffs, and Mexico also announced plans to impose tariffs on the U.S., escalating fears of trade conflicts with key trading partners.
Economists warned that these new tariffs could hinder economic growth in the U.S. and lead to job losses. Oxford Economics stated in a research note that the tariffs might result in weaker GDP growth, higher unemployment, increased interest rates, and inflation in the U.S., Canada, and Mexico.
The tariffs on Canada and Mexico could raise the prices of various products. Canada announced initial tariffs on American imports like beverages, cosmetics, and paper products, with plans for further tariffs on items such as vehicles, steel, fruits, and dairy products. Mexico indicated it would impose retaliatory tariffs without specifying rates or products.
Automaker stocks took a hit as investors assessed the impact of the tariffs on the industry. Companies like Volkswagen, General Motors, and Ford, which rely on imports from Canada and Mexico, saw their shares decline. General Motors, Ford, and Tesla all experienced notable drops in early trading.
Other sectors were affected as well, with companies like Constellation Brands, Deere & Company, and Caterpillar experiencing declines due to the tariff announcements. The Federal Reserve responded to the tariff news by adjusting its interest rate projections, citing concerns about potential inflationary pressures resulting from trade policies.
The text has been paraphrased to provide a simplified and more concise version of the original information.
I like the text.
