Markets waver, fall again as U.S. tariffs against Canada, Mexico go into effect
CBC
Stocks racked up more losses on Wall Street on Tuesday as a trade war between the U.S. and its key trading partners escalated, with a brief bounce-back in technology stocks failing to reverse overall losses amid shaky global markets.
Just after midnight, the U.S. imposed tariffs on imports from Canada and Mexico, and doubled tariffs against imports from China, sparking retaliatory actions from all three countries and inflaming concerns about a slowdown in the global economy.
The uncertainty was reflected in a volatile day of trading, with Canada's main stock index dropping 429.57 points, or 1.7 per cent.
U.S. markets fell hard early in the day, saw a slight rebound due to technology stocks, and then fell again.
The S&P 500 was down 1.2 per cent on Tuesday, with more than 80 per cent of the stocks in the benchmark index closing lower. The Dow Jones industrial average slid 1.6 per cent.
The Nasdaq composite ended the day with a loss of 0.4 per cent after a roller-coaster ride of falls and climbs. The tech-heavy index briefly reached a 10 per cent decline from its most recent closing high, which is what the market considers a correction, before paring its losses.
Markets in Europe also fell sharply, with Germany's DAX falling 3.5 per cent as automakers saw sharp losses. Stocks in Asia saw more modest declines.
The recent declines in U.S. stocks have nearly wiped out all of the markets' gains since U.S. President Donald Trump's election in November — gains that were built largely on hopes for policies from Trump that would strengthen the U.S. economy.
Worries about tariffs raising consumer prices and reigniting inflation have been weighing on both economists and Wall Street.
Under the new tariffs, imports from Canada and Mexico are to be taxed at 25 per cent, while Canadian energy products are at 10 per cent. The 10 per cent tariff that Trump placed on Chinese imports in February was doubled to 20 per cent.
Canada has already slapped tariffs on $30 billion worth of American goods, and has promised to introduce tariffs on $125 billion more in three weeks. Prime Minister Justin Trudeau, citing a Wall Street Journal editorial, called Trump's targeting of Canada a "very dumb" move, adding that more non-tariff measures are coming if Trump doesn't back down.
China has announced it will impose additional tariffs of up to 15 per cent on imports of key U.S. farm products, including chicken, pork, soy and beef, and expanded controls on doing business with key U.S. companies. Mexico is also planning tariffs on goods imported from the U.S., with more details to be announced on Sunday.
The U.S. dollar index hit its lowest level since Dec. 6, 2024, on Tuesday morning, as concerns about the tariffs' impact on the broader U.S. economy initially outweighed expected boosts from the move.
"We've seen the dollar weakened, but I think this reflects markets' assumptions about how the tariffs will have a negative impact, not just on external growth, but ... on U.S. growth," Brian Daingerfield, foreign exchange strategist at Natwest Markets in New York, told Reuters.
