US stocks took a sharp dive on Tuesday after President Donald Trump reiterated his plan to impose more heavy tariffs on Canada.
Trump announced on social media that he would introduce a 25% tariff on Canadian electricity and a 50% tariff on all steel and aluminum the US imports from Canada.
By mid-morning, the Dow Jones was down 540 points, or 1.3%. The S&P 500 dropped by 1.1%, and the Nasdaq Composite fell 0.8%.
The sell-off continued following a steep drop on Monday, where the Dow lost 890 points, and the S&P 500 dropped by 2.7%. The S&P 500 is now nearly 9% lower than its February record high, inching toward a correction.
President Trump has suggested that tariffs could cause “a little disturbance.” However, Commerce Secretary Howard Lutnick downplayed the stock market’s losses, saying the market’s daily ups and downs weren’t a major concern for the administration.
The sharp market decline is a result of growing fears among investors. CNN’s Fear and Greed Index shows that “extreme fear” has been dominating the market for the past two weeks, partly driven by the uncertainty surrounding Trump’s shifting tariff policies.
On Monday, Wall Street reacted to worries about Trump’s unpredictable tariff strategies with Canada, Mexico, and China. At one point, the Dow was down 1,000 points, which would have ranked among the worst days in market history. The Nasdaq dropped 4.2%, its biggest drop since September 2022. The S&P 500 closed below its 200-day moving average for the first time since November 2023.
The sell-off spread to global markets on Tuesday. In Asia, stocks fell sharply, with Japan’s Nikkei 225 index dropping 2%. South Korea’s Kospi plunged as much as 3%. European markets also felt the impact, with London’s stock market dropping 79.66 points.
Even conservative news outlets like Fox are showing growing concern about the situation, and some are now reflecting on Trump’s previous criticism of the Biden administration’s handling of the economy last year.
