E-Paper
Donald Trump’s 25% tariff announcement tumbles US stocks, stirs global trade war fears
Donald Trump said there was “no room left” for a deal to avoid the tariffs on Canada and Mexico, adding that reciprocal tariffs would begin on April 2.
US stocks fell sharply on Monday, with the S&P 500 experiencing its largest daily percentage drop since December 18, following US President Donald Trump’s announcement that 25 percent tariffs on Canada and Mexico would take effect on Tuesday.
Meanwhile, the euro strengthened as European leaders agreed to formulate a peace plan for Ukraine.
Tariff comments led US indexes to hit session lows, while both the Canadian dollar and Mexican peso slid to one-month lows.
Trump said there was “no room left” for a deal to avoid the tariffs on Canada and Mexico, adding that reciprocal tariffs would begin on April 2.
“It seems that tariffs are definitely going to go through and it increases the chances of a real economic fallout. The markets are not psyched to stick around for that,” said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta.
“To say ‘no room’ for negotiation is a hard line, a definitive statement,” added Martin.
Shares of U.S. automakers declined, with General Motors down 3.6%.
US economic data on Monday weighed on stocks, showing steady manufacturing in February but a rise in factory prices and delays in material deliveries, suggesting that tariffs could soon impact production.
The Dow Jones Industrial Average dropped 649.67 points, or 1.48 percent, to 43,191.24, the S&P 500 fell 104.78 points, or 1.76 percent, to 5,849.72, and the Nasdaq Composite decreased 497.09 points, or 2.64 percent, to 18,350.19.
MSCI's global stock gauge declined 0.83 percent, while Europe's STOXX 600 index gained 1.07 percent, led by a surge in European arms makers' shares. The euro strengthened 1.07 percent to $1.0486, and the dollar index fell 0.72 percent to 106.54.
European leaders agreed over the weekend to draft a peace plan for presentation to the United States, following a clash between Ukrainian President Volodymyr Zelensky and Trump in the Oval Office.
“That's certainly a positive for Europe because it's unifying more of western Europe including Ukraine and drawing a line for the Russians, who have been very transparent that they want to recreate the old Soviet Union,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
Bitcoin saw a decline after its weekend surge, triggered by Trump's suggestion of a new U.S. strategic reserve that could include various tokens.
On Sunday, Trump posted on Truth Social, revealing that his January executive order on digital assets would establish a stockpile of currencies, including Bitcoin, Ether, XRP, Solana, and Cardano.
With Reuters inputs
