Wall Street tumbles as Trump confirms tariffs on Canada, Mexico and China

US stocks plunged on after President Donald Trump confirmed that steep tariffs on Canada and Mexico would take effect as scheduled, stoking fears of escalating trade tensions and economic uncertainty.

The Dow Jones Industrial Average dropped nearly 800 points, or 1.8%, while the S&P 500 fell 2.1%, marking its worst trading day of the year. The Nasdaq Composite tumbled 3%, weighed down by a separate slump in Nvidia, which lost more than 9%.

Speaking at the White House alongside Commerce Secretary Howard Lutnick, Trump said the deadline for trade negotiations had passed, and the US would move forward with a 25% tariff on Canada and Mexico, effective Tuesday.

"No room left for Mexico or for Canada," Trump said. "Tomorrow, tariffs—25% on Canada and 25% on Mexico—will start."

Even before Trump's remarks, fresh economic data signaled growing concerns over the strength of the US economy. A closely watched gauge of manufacturing activity showed rising supplier costs, partly attributed to uncertainty over trade policies.

"The incoming tariffs are pushing our product prices higher," an executive in the machinery sector told the Institute of Supply Management. "Most suppliers are implementing sweeping price increases, with labor costs also rising."

Market sell-off erased early-year gains on Wall Street, where investors had initially welcomed the new administration’s policies on deregulation and tax cuts. The Dow, which had been up as much as 5% this year, is now hovering just 1% above its starting level for 2025.

Softening consumer confidence and a sharp drop in retail sales last month have raised further concerns about the economic outlook. Major corporations, including Walmart, have warned that the administration’s trade policies could negatively impact business in the coming months. However, some companies, such as Chipotle, have indicated they plan to absorb the additional costs for now.