Experts say stocks fell in trading on Tuesday morning as the trade war between the U.S. and its major trading partners escalated, but uncertainty around tariffs kept global markets from a huge shock.
Tariffs between the United States, China, Canada and Mexico have helped to expand the recent downturn in U.S. stocks, which is caused by weak economic conditions.
The S&P 500 fell 1.4%, with nearly every industry lowering weight except real estate and utilities, which is often considered a relatively safer investment.
Canada’s major stock index fell nearly 400 points in early trading, with the Dow Jones industrial average being one of the biggest indicators of U.S. economic health, down 580 points or 1.3% as of 10:04 a.m. ET. Nasdaq Composite fell 1.4%.
European markets fell sharply, while Asian stocks fell slightly.
Declined after a Monday sell-off. Eliminated gains in all markets since the November election by U.S. President Donald Trump. Fears about tariffs raising consumer prices and focus on inflation have been under pressure on the economy and Wall Street.
Imports from Canada and Mexico are 25% and Canadian energy products are subject to import tariffs of 10%. Trump doubled its 10% tariff on Chinese imports in February to 20%.
Revenge is quick.
China responded to the new tariffs, announcing that it would impose up to 15% tariffs on imports of major U.S. agricultural products, including chicken, pork, soy and beef, and expand control over its operations with major U.S. companies.
Canada plans to charge tariffs on more than $100 billion in U.S. goods over 21 days. Mexico also plans to impose tariffs on goods imported from the United States
Market reaction initially muted
One expert said the uncertainty surrounding the trade war – experts are not clear on how long tariffs and counter-verifications may last, one reason the initial market reaction was somewhat muted.
“What we don’t know is duration, it’s key,” Derek Holt, vice president and head of capital market economics at Scotiabank, noted in his notes to clients. He added that Trump could be a turbulent figure in his decision-making, so it is unclear how dedicated he is to maintaining tariffs.
“If they last, then [North American] The economy and market will be bigger. This may not take long given the guidance from the automotive industry, as cancellations and plant closures can be started within about a week after arrival. ”
Holt said that at this stage, the retaliation measures taken by Canada, Mexico and China are not as extreme as those formulated by the United States, limiting some of the damage to the market.
When Canada matches the 25% tariff, the target against the target is a small amount of U.S. imports. China’s tariffs on U.S. goods will not take effect until March 10, and Mexico will not announce its targets for countermeasures of U.S. products to measure before Sunday.
Holt said the “implicity points” of these moves are to leave room for negotiation and minimize the impact on the domestic economy.
Montreal Bank chief economist Douglas Porter said in a notice to clients that if the tariffs remain for one year, Canada would “at risk of a moderate recession.”
“Given the lack of historical precedent, we have little confidence, and we estimate that tariffs will reduce real GDP growth by about 1.5 ppts to 0.5% in 2025,” he wrote.
Retailer, alert company
Tariffs are driving warnings from retailers, including Target and Best Buy, as they report the latest financial results. Despite beating Wall Street’s revenue forecast, the target number fell 4.9%, with reports saying its profits from the year starting out would be “meaningful pressure” due to tariffs and other costs.
Best Buy fell 13.9% after giving investors a weaker forecast of earnings and warning of the impact of tariffs.
U.S. President Donald Trump’s 25% tariff on Canadian goods is expected to begin on March 4. Adrienne Arsenault of the country asked journalists and a business professor to answer questions about how tariffs will affect prices, a possible recession and Canadian diplomacy.
At the consumer level in Canada, some of the impact is direct.
Ontario’s Liquor Control Commission website sold alcohol products to the public Tuesday morning, showing an error page indicating that it was “temporarily unavailable and we removed our products in response to our tariffs on Canadian goods.”
LCBO pointed out that its in-store service will not be affected.
