Traders work on the floor of the New York Stock Exchange (NYSE) in the Financial District in New York City on March 4, 2025.
Timothy A. Clary | Afp | Getty Images
U.S. stocks saw losses mount on Tuesday as President Donald Trump‘s tariffs on key trade partners took effect and prompted retaliatory measures, escalating fears of a global trade war and the national economy cracking.
The Dow Jones Industrial Average dropped 820 points, or 1.9%, building on Monday’s plunge of nearly 650 points. The S&P 500 shed 2%. Both are on track to notch their worst sessions of 2025.
The Nasdaq Composite lost 1.9%. That put the tech-heavy index on track to close in correction territory, which is when it falls 10% from a recent high.
Nasdaq Composite, 1-year
Tuesday’s nosedive comes after the U.S. instituted 25% duties on Canada and Mexico that took effect at midnight. Trump also slapped an additional 10% tariff on Chinese goods.
China retaliated with additional tariffs of up to 15% on some U.S. products. Canadian Prime Minister Justin Trudeau said his country would also put a 25% levy on U.S. goods. Mexican President Claudia Sheinbaum said the U.S.’ southern neighbor would respond with tariffs and other tools that would be announced this weekend.
Shares of GM and Ford dropped more than 3% and 2%, respectively, building on declines seen this year amid concerns that tariffs would raise costs. Chipotle, which sources about half of its avocados from Mexico, slipped more than 2%.
The tariffs prompted a broad sell-off on Tuesday. About 4 out of every 5 S&P 500 stocks traded down, while the small-cap focused Russell 2000 dropped more than 2%.
Tech names felt the brunt of investors’ recent shift away from U.S. stocks, underscoring the Nasdaq’s recent fall. Notably, artificial intelligence darling Nvidia pulled back more than 2% in the session. That pushed the megapcap tech titan’s loss for 2025 to more than 17%, including a decline of more than 14% notched over just the last five sessions alone.
This week’s sell-off pushed the S&P 500 into the red for 2025 and the Dow near flat on the year. Because investors hoped that a last-minute deal could be reached to sidestep the full taxes on Mexico and Canada, losses steepened in Monday’s session after Trump confirmed the long-awaited levies were coming. Paired with soft economic data released recently, the tariffs have given market participants further reason for worry about the health of the U.S. economy.
“While Tuesday’s tariffs are a go, it remains very unclear on just how long these tariffs will remain,” said Clark Geranen, chief market strategist at CalBay Investments. “We tend to believe these are more of a negotiation tactic and not the start of a long and drawn out reciprocal trade war. Still, in these situations, investors sell first and ask questions later.”
With Tuesday’s losses, the S&P 500 now trades below where it finished on Election Day in November, when voters headed to the polls to return Trump to office. Traders will closely monitor Trump’s address to Congress on Tuesday night for statements about the tariffs, which were a core pillar of his campaign.
