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  Live Updates: Markets Fall After New Trump Tariffs Prompt Retaliation

China and Canada immediately announced retaliatory tariffs, and Mexico said it would announce its own measures on Sunday. The responses escalated a trade war that has rattled the globe.

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Data delayed at least 15 minutes

Source: FactSet

By The New York Times

Pinned

Here are the latest developments.

Stock markets opened lower on Tuesday, reflecting mounting investor concerns about the global economy, after President Trump imposed tariffs on Canada, Mexico and China, and Beijing and Ottawa announced swift retaliation. The escalating trade war added to global uncertainty that was compounded by the Trump administration’s decision to suspend military aid to Ukraine.

The S&P 500 fell 0.7 percent at the start of trading, adding to a 1.8 percent loss on Monday that was its sharpest decline this year. European stock markets also fell in trading on Tuesday.

The Trump administration’s new tariffs — 10 percent on imports from China and 25 percent on most imports from Canada and Mexico — may encourage some companies to set up factories in the United States, but they could also strain supply chains, add costs for American consumers and manufacturers, and test diplomatic ties.

China and Canada imposed tariffs on U.S. goods, while President Claudia Sheinbaum of Mexico said Tuesday that her country would announce its countermeasures, including retaliatory tariffs, on Sunday. 

China’s finance ministry announced 15 percent tariffs on imports of chicken, wheat, corn and cotton from the United States, as well as 10 percent tariffs on imports of sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products.

Canada imposed 25 percent tariffs on $30 billion worth of goods at 12:01 a.m. Eastern but did not specify which products would be affected. Prime Minister Justin Trudeau of Canada said in a statement that the tariffs would extend to $125 billion of American goods in 21 days.

Here’s what you need to know:

  • Stock markets: European stock markets also fell on Tuesday. The Euro Stoxx 50, which represents the biggest publicly listed companies in the eurozone, Britain’s FTSE 100 and the DAX index in Germany, were all down. Shares in European carmakers that have big manufacturing operations in Mexico to supply the U.S. market, including Volkswagen and Stellantis, which owns Chrysler and Jeep, fell, too.

  • Mexico responds: Ms. Sheinbaum said on Tuesday that her government rejected the Trump administration’s assertions that Mexico’s government had failed to crack down on cartels that export drugs including fentanyl to the United States, calling it “offensive, defamatory and without substance.” Mr. Trump has characterized the latest tariffs as a response to what he deems a lack of action on such issues.

  • China’s reaction: China’s retaliation includes levies on U.S. food imports and halting the sale of Chinese goods to 15 American companies. China is the top overseas market for American farmers, wielding considerable influence over prices and demand in the commodities markets of the Midwest.

  • Canadian damage: Tariffs are likely to damage Canada’s economy, which is dependent on exports and tightly integrated with the American market. Its prime minister, Justin Trudeau, is expected to address his country’s response in a news conference on Tuesday morning.

  • Tariff basics: Trade wars were a feature of Mr. Trump’s first term. But his latest tariffs could broaden the scale of disruption. Canada, Mexico and China account for more than a third of the products brought into the United States.

Simon Romero

Mexico’s currency, the peso, fell as much as 1.10 against the dollar after markets opened on Tuesday morning, and the country’s main stock index declined 1.26 percent. Financial markets in Mexico, which relies overwhelmingly on trade with the United States, are rattled by the prospect that the Trump administration’s new tariffs could push the country’s already weak economy into a recession.

Colby Smith

Krishna Guha, vice chairman at Evercore ISI, warned that if these tariffs are maintained, it would increase the Federal Reserve’s preferred inflation gauge by roughly half a percentage point by the final quarter of the year. The core personal consumption expenditures price index, which strips out volatile food and energy prices, stood at 2.6 percent as of January. The impact would persist into next year, Guha warned, forecasting an additional 0.2 percentage point bump up in core PCE inflation in 2026.

Colby Smith

Tariffs of this nature would not only increase prices but also dent growth, Guha said, adding that the hit could be “potentially large but more uncertain.”


STATUSCOUNTRYDESCRIPTION
In effectFeb. 4China10% on all imports ›
In effectMarch 4Mexico25% on all imports ›
In effectMarch 4Canada25% on most imports, lower rate for energy ›
In effectMarch 4ChinaAdditional 10% on all imports ›
PlannedMarch 12World25% on aluminum and steel ›
PlannedApril 2WorldUnspecified tariff on all agricultural products
PlannedApril 2WorldUnspecified tariff on all foreign cars ›
ProposedWorldInvestigation into copper imports ›
ProposedWorldInvestigation into lumber imports ›

Source: Peterson Institute for International Economics, Wells Fargo Economic Insights

 

The New York Times

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