Dow, S&P 500, Nasdaq sink after Trump hits Canada, Mexico, China with tariffs

US stocks fell sharply on Monday, as Wall Street showed the effects of President Donald Trump’s announcement of tariffs on China, Mexico, and Canada.

The tech-heavy Nasdaq Composite (^IXIC) fell more than 2% while the S&P 500 (^GSPC) spiraled 1.6%. The Dow Jones Industrial Average (^DJI) tumbled 1.2%, or over 550 points.

Consumer discretionary (XLY) stocks, which includes the auto makers, fell the most. Tech (XLK) also led the markets lower as shares of AI chip giant Nvidia (NVDA) and iPhone maker Apple (AAPL) dropped.

The tariffs, set to take effect on Tuesday, will include 25% duties on Canada and Mexico, and 10% on China. Energy imports from Canada will be lower with a 10% duty.

Trump has also said tariffs on Europe will “definitely happen,” but gave no further detail. European stock markets (^STOXX) moved lower Monday.

The US dollar index (DX-Y.NYB, DX=F) rose to trade near its highest levels in two years. Meanwhile, West Texas Intermediate crude futures (CL=F) jumped well over 2%, outpacing the 1.6% rise for the international benchmark Brent (BZ=F).

With Trump’s tariffs arriving as expected over the past week, focus has been honed in on retaliatory announcements. As Yahoo Finance’s Ben Werschkul reported, Canada and Mexico were quick to announce measures across a range of US goods. Prime Minister Justin Trudeau said Canada will place 25% counter-tariffs on around $107 billion in American-made products.

The trade war is causing “considerable uncertainty about President Trump’s trade agenda for 2025.” That uncertainty is a large part of the Fed’s desire to keep a hold on rates for fears of a rise in inflation.

The tariffs are due to impact consumers directly across a number of industries. Automobiles and auto parts, gas and oil, clothes, computers, whiskey, and avocados are a small selection of items where prices are expected to rise.

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Market sell-off shows investors were ‘underpricing’ Trump’s promised tariffs

Investors didn’t take President Donald Trump at his word, and now markets are selling off in reaction to his move to impose hefty tariffs on Canada, Mexico and China.

“While we have not had tariffs baked into our own US equity market outlook, we have been concerned that many financial market participants have been underpricing the risk that they were more than a negotiation tool,” RBC Capital Markets head of US equity strategy Lori Calvasina wrote in a note to clients on Sunday.

Even betting markets, which many believe were a leading indicator during the recent Presidential Election, weren’t pricing in high odds of tariffs. As of Jan. 29, Polymarket, a popular online betting offering, was pricing in just 20% odds that Trump imposed 25% tariffs on Canada and Mexico.

Now it appears the market consensus was offsides and investors are facing a repricing of potential risks. The US dollar has shot up to 109, near its highest level in two years. Retail and auto stocks that could be impacted by tariffs also sold-off.

“Full implemented tariffs with staying power don’t appear to be in the price of key markets,” a team of Morgan Stanley equity strategists and economists wrote on Sunday.

They added, “US equities may come under pressure, and services should outperform consumer goods.”

Read more here.
Stocks tank as trade war sparks market-sell-off

US stocks tanked on Monday as investors weighed the impacts of US tariffs on Mexico, Canada, and China.

The tech-heavy Nasdaq Composite (^IXIC) fell more than 2% while the S&P 500 (^GSPC) dropped more than 1.6%. The Dow Jones Industrial Average (^DJI) tumbled 1.2%, or over 500 points.

Tech (XLK) and Consumer Discretionary (XLY) stocks, which includes the auto makers, led the way lower. Shares of Nvidia (NVDA) fell roughly 4% while iPhone maker Apple (AAPL) also dropped.

EV giant Tesla (TSLA) also fell more than 4%.

US tariffs announced over the weekend against China, Mexico and Canada prompted retaliatory duty announcements from Canada and Mexico.

“In the US, growth expectations are already high and the market appears to have priced little risk of downside from tariffs,” wrote Goldman Sachs senior markets advisor Dominic Wilson in a Sunday note.
Nvidia sinks 4% in pre-market as tariff war prompts market sell-off

Chip giant Nvidia (NVDA) fell as much as 4% in pre-market to lead tech lower on Monday as US tariffs on imports from Canada, Mexico and China are set to start on Tuesday.

The AI bellwether was already on a downward trend sparked by the release of a China’s DeepSeek artificial intelligence model in January. Growing concerns over the possibility of wider export limitations to China has also weighed on the stock in recent sessions.

Other tech names faltering in pre-market include iPhone maker Apple (AAPL), down 2%, and EV giant Tesla (TSLA), down more than 3.5%.

A market-wide sell-off was underway in pre-market after the Trump administration over the weekend moved forward with 25% tariffs on imports from Mexico and Canada, and 10% tariffs on imports from China. The duties are set to start on Tuesday. Mexico and Canada have in turn ordered retaliatory duties on American goods.
Good morning. Here’s what’s happening today.
Dollar rises to trade near 2-year high

The US dollar (DX=F) is surging as investors weigh the risks of trade war after President Trump’s tariff salvo.

On Monday morning, the greenback was trading near its highest level in almost two years against a basket of leading currencies, with the dollar index (DX-Y.NYB) up nearly 1%.

Canada and Mexico’s currencies were among the hardest hit, after Trump said he would hit both with 25% tariffs from Tuesday. The Canadian dollar (CADUSD=X) dropped to its lowest against the US dollar since 2003, while the Mexican peso (MXNUSD=X) sank to an almost three-year low.

The euro (EURUSD=X) also lost some ground on the heels of Trump’s warning to the EU that tariffs will “definitely happen,” though he offered no other details.

The gains for the dollar fed into worries that more expensive imports could fuel inflation, which would curb the Federal Reserve’s scope to lower interest rates.
Big Three US automaker stocks retreat

Shares of big US automakers Ford (F) and General Motors (GM) sank in Monday’s pre-market trading, mirroring a drop in European peers’ stocks.

GM fell 6.5%, while Ford moved about 4% lower. Stellantis, the last of the traditional Big Three, saw its US-listed stock retreated roughly 6%. Electric vehicle maker Tesla (TSLA) shed about 2%.

Carmakers are among the industries likely to take the biggest hit from the tariffs on Mexico and Canada, given they are heavily reliant on cross-border trade. Between 25% and 40% of the vehicles the Big Three sell in the US are imported from one of those two countries, per a Financial Times report.

Ford CEO Jim Farley told Yahoo Finance last week that he expected Trump’s tariff positioning to play out beyond February, but signaled the company could withstand them better than its rivals as it has the largest US manufacturing footprint. See more here.
Keep a close eye on footwear and clothing stocks

Spring break and back-to-school shopping may cost quite a bit more thanks to Trump’s new tariffs on Mexico, Canada, and China.

Here are the footwear and clothing retailers most expoto the new tariffs, according to data from Stifel analyst Jim Duffy:
How the market views tariffs

The reactions from Wall Street on Trump’s tariffs are trickling in, and universally folks view them as bad for the economy and bad for markets.

I put some of the reactions that stood out to me here.

But I liked what Goldman Sachs strategist David Kostin said this morning on the tariff front. It’s a good reminder as to what companies are now up against:

“If company managements decide to absorb the higher input costs, then profit margins would be squeezed. If companies pass along the higher costs to its end customers, then sales volumes may suffer. Firms may try to push back on their suppliers and ask them to absorb part of the cost of the tariff through lower prices.”
Goldman: S&P 500 risks slump as tariffs hit earnings

US stocks face a 5% drop this year amid a hit to earnings if the Trump administration lets its hefty tariffs on Canada, Mexico, and China run for a while, Goldman Sachs has warned.

Goldman strategist David Kostin said sustained tariffs could reduce his S&P 500 earnings growth forecast by about 2% to 3%.

The benchmark could come under pressure from a hit to earnings and equity valuations, driving down the fair value of the S&P 500, he told clients in a note.

Kostin joins a panoply of Wall Street analysts cautioning about the impact of the tariffs on the economy and stock market. JP Morgan’s metals and mining team said it sees the biggest financial risks to Alcoa (AA), GrafTech International (EAF), and Cleveland Cliffs (CLF).

Read more here in a report by Yahoo Finance’s Brian Sozzi.
Asia stocks fall, but tech buoys Hong Kong-listed names

Hong Kong-listed shares in Chinese companies outdid Asian peers on Monday, holding up in the face of looming tariffs thanks to strength in the tech sector.

The Hang Seng China Enterprises Index (^HSCE) closed broadly flat, compared with falls of 2.6% for both the Nikkei 225 (^N225) in Tokyo and South Korea’s KOSPI (^KS200). Markets in Shanghai are shuttered for the Lunar New Year holiday, and will reopen on Wednesday.

A rally in Alibaba (9988.HK, BABA) and SMIC (0981.HK) shares provided a tailwind, coming as DeepSeek-fed hopes for Chinese AI fed through after a holiday shutdown in trading.

China is keen to kick off trade talks with the US, and it is laying the groundwork for a push to head off bigger tariff hikes and tech curbs, The Wall Street Journal reported.
Europe stocks tumble as automakers take a hit

European stocks fell sharply early on Monday amid fears the region is next in line for tariff hikes by the Trump administration.

The Stoxx 600 (^STOXX), the pan-European benchmark, slumped 1.3% as investors weighed President Donald Trump’s comment that tariffs would “definitely happen” for EU imports to the US. Germany’s DAX (^GDAXI) fell 1.6%, while the CAC 40 (^FCHI) in Paris dropped 1.5%.

Shares in carmakers, which are more sensitive to tariffs, led the sell-off, with Stellantis down 6%.
Asian markets slide as Trump tariffs make impact

Asian markets, the first to open since President Donald Trump’s tariff announcement, have seen big slides as investors react to a trade war poised to erupt.

Major Asian indexes all saw heavy losses throughout the day’s trade as The MSCI Asia Pacific Index fell more than 2%, Hong Kong’s Hang Seng Index was down 0.7%, Japan’s Nikkei 225 was 2.8% lower, South Korea’s Kospi tumbled 3% and Australia’s ASX 200 fell 1.9%.

Markets in mainland China have remained closed for the Lunar New Year holiday, but with China being singled out for a 10% tariff on exports we can expect to see a similar downturn.

Currently, Beijing has not announced a plan of economic retaliation. Instead there have been calls to “meet China halfway” from the Chinese ministry of Commerce in negotiations around the upcoming implementation of duties.

Some of the biggest sectors to see downturns from the tariffs include:

Automakers saw shares drop of at least 5% in household names such as Toyota (TM), Honda (HMC) and Nissan (7201.T)

Chinese e-commerce platforms are under fire as the “de minimus” trade exemption for small package is getting expired. Leading to impacts on costs for clothing, accessories, home goods and electronics.

Asia’s biggest chip exporters, including Taiwan Semiconductor Manufacturing Co (TSM) . and Samsung Electronics Co (005930.KS)., dipped by 1% as Trump said he would tax the essential components of electronics.
Oil jumped Sunday in response to sweeping tariffs placed by President Donald Trump on a range of imports — including crude from Canada and Mexico. Consumers can expect a rise in energy prices over the coming weeks in response to the rise in crude.

West Texas Intermediate (CL=F) futures hit as high as $75.18 a barrel, over a 3% rise, while Brent crude (BZ=F) topped out around $76 with a 1% bump.

Crude oil is one of the commodities subject to a reduced duty of 10% as part of an understanding that Canada and the US have a heavy dependency on each other to fulfill their energy needs. The US imports nearly 4 million barrels a day from Canada. The tariff announcement led to gas futures pumping upwards by just shy of 3%.

Trump has flagged even wider tariffs in the coming months, including against the European Union and covering an ever-increasing variety of goods and industries. Prices can be expected to shift roughly as the president warned “THERE WILL BE PAIN” in a post on Truth Social late Sunday.