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By Katherine Fung
Senior Writer
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U.S. stocks plummeted Monday afternoon after President Donald Trump confirmed that blanket tariffs on Canada and Mexico would begin Tuesday.
The Dow Jones Industrial Average closed lower by 650 points, or about 1.5 percent, after being down as much as 800 points after the president's remarks. The S&P 500 lost 1.75 percent for its biggest loss since December. The tech-heavy Nasdaq lost 500 points, or more than 2.5 percent.
"Very importantly, tomorrow, tariffs 25 percent on Canada and 25 percent on Mexico," Trump said during a Monday event about investment in U.S. chipmaking capacity.
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Why It Matters
Trump's remarks dashed investor hopes that the administration would announce a last-minute deal to again delay those tariffs, which are expected to wreak havoc on trade between the U.S. and its immediate neighbors.
What to Know
All three major indexes were already coming into March in the red. The Dow and S&P each fell more than 1 percent in February, while the Nasdaq saw its worst month since April 2024 on growing concerns over tariffs, AI competition and sticky inflation data.
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Manufacturing data released earlier on Monday also came in weaker than expected, suggesting inflationary pressure continue to rise. Many economists say the new tariffs on Canada and Mexico are likely to accelerate inflation as they will make goods more expensive as manufacturers pass on the levy to consumers.
Trump signed the executive order imposing the tariffs back on February 1, but postponed them for a month after both countries pledged to help address immigration at their respective borders with the U.S.
But those actions were not enough to placate Trump, who said Monday: "Just so you understand, vast amounts of fentanyl have poured into our country from from Mexico, and as you know, also from China, where it goes to Mexico and goes to Canada."
Many had hoped that the tariffs would not actually go into effect at the 25 percent level the president initially proposed. Those hopes have now been all but dashed.
"They're all set. They go into effect tomorrow," Trump said after telling reporters there was "no room left" to negotiate.
What People Are Saying
President Donald Trump wrote on Truth Social Thursday: "We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled."
Mélanie Joly, Canada's foreign minister, told the Associated Press: "If Trump is imposing tariffs, we are ready. We are ready with $155 billion worth of tariffs and we're ready with the first tranche of tariffs, which is $30 billion."
Claudia Sheinbaum, president of Mexico, told reporters on Monday hours before Trump's remarks from the White House: "We are going to wait and see what happens. In that, you need to have mettle, serenity and patience, and we have Plan A, Plan B, Plan C, Plan D, so we are going to wait for today."
Chris Rupkey, chief economist at FWDBONDS, said in a note obtained by CNBC: "Whether the stock market can survive this change remains to be seen. One way or another, tariffs will be a shock for the economy."
Howard Lutnick, secretary of Commerce, told Fox News on Sunday: "There are going to be tariffs on Tuesday on Mexico and Canada. Exactly what they are, we're going to leave that for the president and his team to negotiate."
What's Next
Tariffs will likely increase the prices paid by U.S. consumers since importers usually pass on at least a share of the new taxes. That could make the costs of things like groceries, gas and car parts more expensive for Americans. Canada and Mexico have also signaled they are prepared to impose retaliatory tariffs on the U.S.
Update 4:10 p.m. ET: This story has been updated with new information after the market closed in New York.
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