NEW YORK (AP) — Stocks tumbled in morning trading on Wall Street Tuesday as a trade war between the U.S. and its key trading partners escalated, wiping out all the gains for the S&P 500 since Election Day.
The tariffs between the U.S., China, Canada and Mexico have helped to extend a recent slump for U.S. stocks that was prompted by signs of weakness in the economy.
The S&P 500 fell 1.4 per cent, weighed down by nearly every sector except real estate and utilities, which are typically considered relatively safer investments.
The Dow Jones Industrial Average shed 580 points, or 1.3 per cent, as of 10:04 a.m. Eastern time. The Nasdaq composite fell 1.4 per cent.
Markets in Europe fell sharply while stocks in Asia saw more modest declines.
The drops follow a steep sell-off Monday. Altogether, the decline has wiped out all of the markets’ gains since President Donald Trump’s election in November. Worries about tariffs raising consumer prices and reigniting inflation have been weighing on both the economy and Wall Street.
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Imports from Canada and Mexico are now to be taxed at 25 per cent, with Canadian energy products subject to 10 per cent import duties. The 10 per cent tariff that Trump placed on Chinese imports in February was doubled to 20 per cent.
Retaliations were swift.
China responded to new U.S. tariffs by announcing 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. Canada plans on slapping tariffs on more than $100 billion of American goods over the course of 21 days. Mexico also plans tariffs on goods imported from the U.S.
The tariffs are prompting warnings from retailers, including Target and Best Buy, as they report their latest financial results. Target slumped 4.9 per cent despite beating Wall Street’s earnings forecasts. There will be “meaningful pressure” on its profits to start the year because of tariffs and other costs.
Best Buy plunged 13.9 per cent after giving investors a weaker-than-expected earnings forecast and warning about tariff impacts.
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