New York CNN —
US markets dropped again Tuesday after President Donald Trump doubled down on his threat to levy a new round of hefty tariffs on Canada.
Trump said Tuesday in a social media post that he would add a 25% tariff on Canadian electricity and a 50% tariff on all steel and aluminum the US imports from its northern neighbor in retaliation for Ontario’s export surcharge on US electricity.
By midday the Dow was 590 points, or 1.4% lower. The broader S&P 500 fell 1% and the Nasdaq Composite fell 0.53% after fluctuating between gains and losses.
Wall Street’s fear gauge, the Cboe Volatility Index, or VIX, climbed on Tuesday after an intraday surge of 19% on Monday. The index on Monday closed at its highest level since December.
“This market is just blatantly sick and tired of the back and forth on trade policy,” Art Hogan, chief market strategist at B. Riley Wealth Management, told CNN’s Matt Egan.
“It feels as though the administration continues to move the goal posts. With that much uncertainty, it’s impossible for investors to have any confidence,” Hogan said.
The selloff in the Dow and S&P 500 extends a widespread market rout that has rattled Wall Street and raised concerns about when the bleeding will stop.
Trump has cautioned that tariffs could cause “a little disturbance,” and Commerce Secretary Howard Lutnick said last week that “the fact that the stock market goes down half a percent or percent, it goes up half a percent or percent, that is not the driving force of our outcomes.”
The decline comes on the heels of a steep selloff on Monday that saw the Dow tumble 890 points and the S&P 500 shed 2.7%. The benchmark index closed down 8.6% from its record high in February, nearing correction territory.
Trump in an interview with Fox News on Sunday declined to rule out the possibility of a recession, contributing to investor anxiety.
Among the stocks dragging markets lower on Monday were Ford (F) which slid 4% and American Airlines (AAL), which fell 5.5%.
“Extreme fear” has been the sentiment driving investors for the past two weeks, according to CNN’s Fear and Greed Index, stoked by the uncertainty caused by Trump’s back-and-forth tariff announcements.
European stocks slumped as the anxiety around Trump’s tariffs spread to global markets. The pan-European STOXX Europe 600 index was down 1.5% by 12:15 p.m. ET. Germany’s DAX and France’s CAC indexes were 1% and 1.5% lower on the day respectively, while London’s FTSE 100 was down 1.3%.
This is a developing story and will be updated.
