U.S. Stock Market Drops as Investors React to Trump’s Tariff Plan on Canada, Mexico, and China

By Evans Momodu
3 minute digest
Published 10:14 UK GMT, March 4, 2025

Wall Street faced a sharp decline on Monday as investors braced for President Donald Trump’s tariffs on Canada and Mexico, set to take effect by midnight.

Stock Market Tumbles amid Tariff Concerns

• The Dow Jones Industrial Average (DJIA) plunged 650 points (1.48%), closing at 43,191. At its lowest point, the Dow fell nearly 900 points before recovering slightly.
• The S&P 500 Index dropped 1.76%, marking its biggest one-day loss of 2025.
• The Nasdaq Composite Index fell 2.64%, bringing its total decline to 6.5% since Trump took office on January 20.

Trump’s Tariff Plan Targets Canada, Mexico, and China

During a White House press conference, Trump confirmed the tariffs:

• Canada & Mexico: 25% tariffs on imports from both countries.
• China: An increase from 10% to 20% on Chinese imports, aimed at pressuring Beijing to take stronger action against fentanyl trafficking into the United States.

“We’re enforcing a 25% tariff on Canada and Mexico, starting tomorrow. They need to build car plants and other manufacturing hubs in the United States—then there will be no tariffs,” Trump stated.

He emphasized that these measures are meant to punish foreign economies that he claims are taking from the U.S. economy without giving enough in return.

Canada Responds with $30 Billion in Retaliatory Tariffs

Canadian Prime Minister Justin Trudeau swiftly responded, warning that Canada will retaliate with tariffs on $30 billion worth of U.S. goods.

“Canada will not let this unjustified decision go unanswered,” Trudeau said in a statement.

Stock Market Volatility Surges

• The VIX Index, also known as Wall Street’s Fear Gauge, surged to its highest level this year, reflecting increased investor uncertainty.
• “This tariff uncertainty has erased the gains from the Trump bump following the presidential election,” said Gustavo Flores-Macias, a Cornell University professor of public policy.

Largest U.S. Tariff Imposition in History

• The tariffs on Chinese goods, which began on February 4, now cover $1.4 trillion in imports—three times more than the $380 billion taxed during Trump’s first term.
• According to Tax Foundation estimates, this represents the largest set of import tariffs in U.S.-China trade history.

With these new tariffs on Canada, Mexico, and China, analysts are closely watching how the U.S. economy, stock market, and global trade relations will evolve in 2025.
Source: CNN 
Image: RNZ