Dow Jones drops 650 points as trade war escalates with tariff hikes
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U.S. equities faced sharp declines on Monday as President Donald Trump confirmed the implementation of 25% tariffs on Canadian and Mexican imports, officially escalating global trade tensions. The Dow Jones Industrial Average plummeted 650 points (-1.5%), while the S&P 500 lost 1.8% and the Nasdaq Composite tumbled 2.7% amid investor concerns over the economic fallout of retaliatory measures from major trade partners.
China responded swiftly, imposing 15% tariffs on U.S. agricultural goods and restricting exports to 15 American companies. Additionally, Beijing placed 10 more firms on its unreliable-entity list. Canada matched the U.S. tariffs with 25% levies on $21 billion worth of American exports, signaling further economic strain on global supply chains.
Beyond trade policy, economic data added to investor anxiety. The latest U.S. manufacturing PMI reading for February came in at 50.3, slightly below expectations of 50.5. The new orders index saw a sharp decline to 48.6 from 55.1 in January, marking the first contraction after three months of expansion. Over the past 26 months, U.S. manufacturing has contracted in 25, underscoring persistent industrial weakness.
Despite the broad selloff in U.S. equities, European markets continued their upward trajectory, with the Stoxx Europe 600 reaching a record high. The FTSE 100 and Germany’s DAX also hit fresh peaks, reflecting resilience in European equities despite ongoing trade disruptions.
The foreign exchange market reacted to the tariff news, with the U.S. dollar weakening as trade risks increased. The EUR/USD pair advanced to $1.0480, while GBP/USD climbed to a three-month high of $1.27. Meanwhile, the cryptocurrency market reversed earlier gains, with Bitcoin retreating alongside Ethereum, which dipped below $2,000 to hit its lowest level since November 2023.
As markets digest the latest trade developments, investors will closely monitor further retaliatory actions and their broader impact on global economic stability.
China responded swiftly, imposing 15% tariffs on U.S. agricultural goods and restricting exports to 15 American companies. Additionally, Beijing placed 10 more firms on its unreliable-entity list. Canada matched the U.S. tariffs with 25% levies on $21 billion worth of American exports, signaling further economic strain on global supply chains.
Beyond trade policy, economic data added to investor anxiety. The latest U.S. manufacturing PMI reading for February came in at 50.3, slightly below expectations of 50.5. The new orders index saw a sharp decline to 48.6 from 55.1 in January, marking the first contraction after three months of expansion. Over the past 26 months, U.S. manufacturing has contracted in 25, underscoring persistent industrial weakness.
Despite the broad selloff in U.S. equities, European markets continued their upward trajectory, with the Stoxx Europe 600 reaching a record high. The FTSE 100 and Germany’s DAX also hit fresh peaks, reflecting resilience in European equities despite ongoing trade disruptions.
The foreign exchange market reacted to the tariff news, with the U.S. dollar weakening as trade risks increased. The EUR/USD pair advanced to $1.0480, while GBP/USD climbed to a three-month high of $1.27. Meanwhile, the cryptocurrency market reversed earlier gains, with Bitcoin retreating alongside Ethereum, which dipped below $2,000 to hit its lowest level since November 2023.
As markets digest the latest trade developments, investors will closely monitor further retaliatory actions and their broader impact on global economic stability.