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US stocks tumbled on Monday as investors braced for the midnight deadline for President Donald Trump’s proposed tariffs on Canada, Mexico, and China to take effect.
The Dow Jones Industrial Average closed 650 points lower, or 1.48%, at 43,191. The index had dropped nearly 900 points during afternoon trading before paring some losses. The broader S&P 500 fell 1.76%, while the tech-heavy Nasdaq Composite plunged 2.64%. The Nasdaq is now down approximately 6.5% since Trump took office on January 20.
Trump Defends Tariffs
“Tomorrow, tariffs – 25% on Canada and 25% on Mexico,” Trump announced during a press conference at the White House. “And that’ll start… 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.”
The president stated that both Canada and Mexico had “no room” left to negotiate and reiterated that the tariffs were a punitive measure against countries he accused of benefiting from the US economy without offering enough in return.
“They’re all set. They go into effect tomorrow,” Trump confirmed.
US Stocks Market Volatility and Investor Concerns
Wall Street’s fear gauge, the VIX index, surged to its highest level this year following Trump’s remarks.
“Due to the uncertainty surrounding the tariffs, the stock market has erased the gains from the ‘Trump bump’ following the presidential election, and the expected upward pressure on prices is giving investors pause,” said Gustavo Flores-Macias, a professor of government and public policy at Cornell University.
Commerce Secretary Howard Lutnick, also speaking at the press conference, suggested that global companies could sidestep the tariffs by investing in US production. He cited the example of Taiwanese chipmaker TSMC, which announced a $100 billion investment in the US on Monday.
US Stocks Plunge: Impact on Businesses and Economy
Analysts at Goldman Sachs warned that while the tariffs could boost demand for American-made goods by making imports more expensive, they might also have negative repercussions.
“Tariff increases will also raise production costs for some domestic producers and will likely prompt foreign retaliation against some US exports, both of which could hurt domestic production,” Goldman Sachs analysts wrote in a note.
The stock market downturn coincided with the latest manufacturing survey from the Institute for Supply Management, which indicated that economic activity in the manufacturing sector remained in expansion territory but had slowed. Tariff-related concerns dominated write-in responses to the survey.
