US stocks retreat after Trump confirms Canada and Mexico tariffs

The National

03-03-2025

US stocks retreated on Monday, continuing a sell-off from February as economic concerns grew after President Donald Trump confirmed he would be implementing tariffs on Mexico and Canada on Tuesday.
In an executive order signed on February 1, Mr Trump said he would impose a 25 per cent tariff on imports from Canada and Mexico and a 10 per cent levy on Canadian energy products. Chinese goods will also face a 10 per cent levy on top of the 10 per cent that was imposed earlier this year.
'They're all set. They go into effect tomorrow,' Mr Trump said, adding 'reciprocal tariffs' will go into effect on April 2.
The Dow Jones Industrial Averaged closed 649.67 points – or 1.48 per cent – lower on Monday after being up nearly 200 points earlier in the day.
Nvidia also fell 8.69 per cent, with shares trading at $114.06, as the tech-heavy S&P 500 tumbled 1.76 per cent.
When asked about tariffs during an earnings call last week, Nvidia chief financial officer Colette Kress told investors they remain 'an unknown until we understand further what the US government's plan is'.
Meanwhile, the Nasdaq Composite dropped 2.64 per cent and the small-cap Russell 2000 tumbled 2.86 per cent. Bitcoin was down nearly 9 per cent at $85,999.12, erasing most of its gains after Mr Trump's crypto reserve announcement at the weekend.
Brent, the benchmark for two thirds of the world's oil, fell 1.63 per cent to $71.62 a barrel. US West Texas Intermediate closed down 1.99 per cent at $68.37. Gold climbed 1.77 per cent to $2,898.80.
Tariffs raise economic concerns
The tariffs on Mexico and Canada had been paused after Mr Trump introduced them last month, but he said on Monday there was 'no room left for negotiations'.
Earlier on Monday, Mexican President Claudia Sheinbaum said she was waiting for Mr Trump's decision before deciding on a course of action. Canadian Foreign Minister Melanie Joy said her country is ready to proceed with retaliatory tariffs Prime Minister Justin Trudeau announced in February.
Economists generally argue that tariffs will increase costs for consumers, lead to higher inflation and slow economic growth.
The Bank of Canada has previously warned a trade war between the two countries would lead to both economies suffering lower growth and higher inflation. Bank of Canada Governor Tiff Macklem has also said previously said 'tariffs mean economies simply work less efficiently'.
The 10-Year Treasury yield dipped more than six basis points to 4.161 per cent. One basis point equals 0.01 per cent. Yields and prices move in opposite directions.
Meanwhile, an inflation report last week showed consumer spending fell 0.2 per cent in January, after economists had anticipated it would increase. A separate survey showed the Conference Board's consumer confidence index fell sharply over concerns of how Mr Trump's policies would affect the economy.
'There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019,' Stephanie Guichard, senior economist of global indicators at the Conference Board, said in a news release.
The Federal Reserve Bank of Atlanta's GDPNow model estimates the US economy will contract by 2.8 per cent in the first three months of this year, down from its previous estimate of minus 1.5 per cent.
Traders anticipate the US Fed will issue several rate cuts this year in response to a slowing economy, beginning in June, according to CME Group data.
St Louis Fed President Alberto Musalem – a voting member on the central bank's rate-setting committee – said on Monday that 'recent data have been weaker than expected, posing some downside risk to growth' although the outlook for 'solid economic growth looks good'.