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By Gabe Whisnant and Sonam Sheth
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The Dow Jones Industrial Average has dropped 1300 points over the last two days as U.S. President Donald Trump moved forward with tariffs against Mexico, Canada and China, America's most prominent trading partners.
Why It Matters
Global markets are bracing for the effect that Trump's tariffs—and retaliatory tariffs from Canada, China and Mexico—will have on American consumers.
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What To Know
The U.S. on Tuesday imposed a 25 percent tariff on goods from Mexico and Canada and increased a 10 percent tariff on China to 20 percent. Canada and China immediately retaliated, while Mexico said it will announce its response later this week.
As a result of the tariffs, the Dow dropped 1.55 percent, or 670 points, adding to a 650-point plummet on Monday. The Nasdaq closed 0.35 percent down and at its lowest was down 2 percent, briefly entering correction territory, which indicates a more than 10 percent drop in the index from its recent peak.
The S&P 500 dropped 1.2 percent and erased its post-election gains. About 80 percent of stocks that make up the index were down for the day. That slip came despite a rebound in major tech stocks like Nvidia and Alphabet.
Retailers Target and Best Buy saw their share prices decline after warning of sales pressures and higher prices for consumers.
The tariffs also negatively impacted trading across different industries, including automakers, banks and other retailers including Ralph Lauren and Williams-Sonoma.
Trump, for his part, has acknowledged that Americans could feel "some pain" associated with tariffs but insisted it would "all be worth the price that must be paid."
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What People Are Saying
Canadian Prime Minister Justin Trudeau, who is on his way out of office, didn't mince words when calling out Trump over the tariffs: "A fight with Canada will have no winners."
He added that the trade war is "very dumb."
Trump hit back at America's northern neighbor and alluded to his desire to annex Canada as the 51st state: "Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!"
Ontario Premier Doug Ford said his province is "ripping up" a deal with Elon Musk's Starlink in retaliation for Trump's tariffs: "We're ripping up Ontario's contract with Starlink," Ford said. "It's done. It's gone."
He added that the Liquor Control Board of Ontario, the world's biggest alcohol buyer, will no longer sell U.S. products.
What Happens Next
Trump on Monday announced additional tariffs on agricultural products that are set to take effect on April 2.
Reporting by the Associated Press contributed to this article.
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