Trump tariffs send US stock market spiraling as investors fear trade war

Major US stock indices fell on Tuesday when the tariffs announced by US President Donald Trump on Canada, Mexico and China came into effect.

These tariffs further fueled the already escalating investor worries about their impact on the global economy, news agency Reuters wrote.

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The Nasdaq closed 9.3% down from its record closing high on December 16.

The Dow Jones Industrial Average fell by 670.25 points or 1.55% to 42,520.99, the S&P 500 lost 71.57 points or 1.22% to 5,778.15, and the Nasdaq Composite fell by 65.03 points or 0.35% to 18,285.16.

Meanwhile, the MSCI’s gauge of stocks across the globe fell by 9.67 points or 1.13% to 846.14, while the pan-European STOXX 600 index fell by 2.14%.

As a result, gold prices rose due to increased safe-haven demand, with spot gold going up 0.6%, reaching $2,911.88 an ounce.

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In response, China and Canada retaliated while Mexican President Claudia Sheinbaum vowed to respond likewise, but gave no specific details.

On top of all this, a trade group representing nearly all major automakers warned that the new 25% tariffs on imports from Canada and Mexico imposed by Trump will lead to drastic price hikes.

“Trump’s tit-for-tat approach has heightened fears of a global trade war, pressuring risk assets while boosting safe havens,” the report quoted Uto Shinohara, a senior investment strategist at Mesirow in Chicago as saying.

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Meanwhile, the the yield on the benchmark US 10-year Treasury note rose by 2.6 basis points to 4.206% after earlier falling to 4.106%, its lowest since October 21.

This was primarily as a reaction to German political political parties agreeing on a 500 billion Euro infrastructure fund, according to the report.