Dow Plunges 650 Points as Trump Confirms Tariffs on Canada and Mexico
The stock market took a major hit today as investors reacted to President Trump’s confirmation that tariffs on Canada and Mexico will officially begin on Tuesday. The Dow Jones Industrial Average tumbled 650 points, closing at 43,191, after nearly hitting a 900-point drop earlier in the day. Meanwhile, the S&P 500 fell by 1.76%, and the Nasdaq Composite took the hardest hit, dropping 2.64%.
This decline is being driven by growing concerns over the economic impact of Trump’s aggressive trade policies. The President made it clear in a press conference that the tariffs—set at 25% on imports from both Canada and Mexico—are intended to push these countries into shifting more of their manufacturing to the U.S. Trump argued that these measures were necessary to ensure fair trade, saying, “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.”
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The response from Canada was swift, with Prime Minister Justin Trudeau vowing retaliatory tariffs on $30 billion worth of U.S. goods if Trump follows through with the plan. “Canada will not let this unjustified decision go unanswered,” Trudeau stated. The market’s volatility was further fueled by Trump’s decision to raise tariffs on imports from China to 20%, up from 10%. He justified the move by citing China’s failure to curb fentanyl shipments into the U.S., making it clear that further tariff increases could be on the table.
Following Trump’s announcement, Wall Street’s fear index, the VIX, surged to its highest level this year, indicating that uncertainty is dominating investor sentiment. Experts warn that while tariffs could boost domestic production, they also risk increasing costs for American manufacturers and consumers. Analysts at Goldman Sachs pointed out that while some U.S. industries may benefit, the overall impact could be negative, particularly for businesses that rely on foreign-made components.
In the tech sector, stocks were hit hard, with Nvidia falling 8.7% and other major companies experiencing declines. Meanwhile, Bitcoin, which had been riding high following Trump’s announcement of a strategic crypto reserve, erased much of its gains, dropping 8.6% to around $85,600. Treasury yields also dipped, with the 10-year Treasury yield falling to 4.16%, reflecting concerns over future economic growth.
Looking ahead, the market is expected to remain highly volatile until there’s more clarity on Trump’s economic strategy. While some investors still see long-term opportunities, the uncertainty surrounding trade policies is making it difficult to predict how 2025 will shape up for the stock market.
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