Stock Market Plunges as Trump Confirms Tariff Implementation
The U.S. stock market tumbled on Monday as President Donald Trump announced that new tariffs on Canada and Mexico would take effect within hours. The S&P 500 fell 1.8%, erasing more gains from its post-election rally, while the Dow Jones Industrial Average dropped 649 points (1.5%), and the Nasdaq Composite slumped 2.6%.
Trump’s firm stance, stating there was “no room left for negotiations,” dashed investor hopes for a softer approach to trade. The latest tariffs, set to begin Tuesday, intensified Wall Street’s concerns about economic growth.
Economic Warnings Shake Investor Confidence
The market has faced weeks of volatility, triggered by disappointing economic reports. U.S. manufacturing data released Monday indicated slower growth and contracting new orders, raising concerns about rising prices linked to tariff costs.
Timothy Fiore, chair of the Institute for Supply Management’s manufacturing business survey committee, stated: “Demand eased, production stabilized, and layoffs continued as companies adjust to the operational shock of new tariffs.”
Tech Stocks and Retail Giants Take a Hit
The tech sector suffered steep losses, with Nvidia dropping 8.8% and Tesla falling 2.8%. Additionally, Kroger shares fell 3% after the company’s CEO Rodney McMullen resigned due to an internal investigation.
Even cryptocurrency-related stocks, which initially surged after Trump’s announcement of a crypto strategic reserve, turned negative. MicroStrategy fell 1.8%, while Coinbase dropped 4.6%.
Global Markets React to U.S. Trade Moves
China saw a rise in orders as importers rushed to buy goods before tariffs increased. However, Beijing is reportedly considering retaliatory measures. Trump’s 10% tariff on Chinese imports will rise to 20% on Tuesday, and the end of the “de minimis” rule will mean all imports, even those under $800, will now face tariffs.
In Hong Kong, shares of bubble tea giant Mixue Bingcheng soared 43% in its stock market debut. Meanwhile, European markets rallied, with Germany’s DAX jumping 2.6% and France’s CAC 40 rising 1.1%, fueled by a report of easing inflation in the Eurozone.
Treasury Yields Fall Amid Economic Slowdown Concerns
The 10-year Treasury yield fell to 4.16% from 4.24%, reflecting investor worries about slowing economic growth. Lower yields typically boost stocks, but given inflation concerns, the Federal Reserve may have limited options for cutting interest rates to support the economy.
Looking Ahead: Will Markets Stabilize?
Investors remain on edge, awaiting further clarity on Trump’s trade policies and potential economic impact. The uncertainty surrounding tariff effects on businesses, inflation, and global trade will likely dictate market movements in the coming weeks.
