US Markets: Selloff deepens as Trump tariffs stoke trade war fears

All eyes now turn to Trump’s address to Congress later Tuesday, where investors will be watching closely for any hints on how the White House plans to navigate the growing trade storm.

U.S. stocks tumbled further on Tuesday as President Donald Trump’s sweeping tariffs on key trade partners took effect, triggering swift retaliation and intensifying fears of economic strain. The escalating trade tensions sent shockwaves through global markets, fueling a sell-off that deepened concerns about growth and corporate profitability.

The Dow Jones Industrial Average plunged 656 points, or 1.4 percent, extending Monday’s nearly 650-point slide. The S&P 500 dropped 1.1 percent, while the Nasdaq Composite lost 0.8 percent, briefly flirting with correction territory—defined as a 10 percent drop from recent highs.

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The market rout followed Washington’s move to impose 25 percent duties on imports from Canada and Mexico, alongside a 10 percent tariff on Chinese goods. In response, Beijing slapped additional levies of up to 15 percent on U.S. exports, while Canadian Prime Minister Justin Trudeau announced a matching 25 percent tariff on American products. Mexico also vowed countermeasures, with President Claudia Sheinbaum set to unveil the details over the weekend.

The tariff shockwaves hit automakers hard, with shares of General Motors and Ford sinking more than 3 percent and 2 percent, respectively. Chipotle, which sources half its avocados from Mexico, slipped over 2 percent. The sell-off was widespread—nearly 80 percent of S&P 500 stocks traded lower, while the Russell 2000, which tracks smaller-cap stocks, shed 1.5 percent.

Tech stocks bore the brunt of investor caution, with AI powerhouse Nvidia dropping nearly 1 percent, extending its staggering 15 percent year-to-date loss. The stock has plunged 14 percent in just five sessions, erasing much of its 2024 gains.

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With the latest declines, the S&P 500 has now fallen below its Election Day closing level from November, when voters returned Trump to office. The Dow is hovering near breakeven for 2025. Markets had held out hope for a last-minute trade resolution, but after Trump confirmed the tariffs would proceed, selling pressure intensified.

Adding to investor anxiety is a string of weak economic data, raising fears that trade disruptions could further weigh on growth. Financial stocks also bore the brunt of the turmoil, with the sector tumbling 3.8 percent—its worst single-day drop since the March 2023 banking crisis that saw the collapse of Silicon Valley Bank.

All eyes now turn to Trump’s address to Congress later Tuesday, where investors will be watching closely for any hints on how the White House plans to navigate the growing trade storm.