The news broke on March 4, 2025 that the United States announced its imposition of tariffs on Canada, Mexico, and China as scheduled, resulting in a sharp drop in the U.S. stock market. The S&P 500 index had evaporated a staggering $3.4 trillion in market value by 10 a.m. Eastern Time.
President Trump declared starting from the early hours of March 4, a comprehensive 25% tariff on goods imported from Canada and Mexico and also doubling the punitive tariffs on China to 20%.
Following this announcement, the stock market experienced significant selling. The S&P 500 index fell by 1.8%, marking its largest single-day decline since December 2024 and plunging into negative territory for the year. Futures continued to come under pressure on Tuesday.
By 10 a.m. Eastern Time, the S&P 500 index wiped out its post-election gains, seeing its market value plummet by $3.4 trillion.
According to a report from Bloomberg, Clark Geranen of investment firm CalBay Investments stated that it’s challenging for investors to make investment decisions based on the current tariff news. He advised against making any drastic adjustments to investment portfolios at this stage.
“While the tariffs on Tuesday are progressing, it is still unclear how long these tariffs will last,” he said. “We tend to believe this is more of a negotiation tactic rather than the start of a protracted trade war. However, in this type of situation, investors are likely to sell first and ask questions later.”
The U.S. dollar saw a sharp decline on Tuesday morning, potentially due to various factors such as traders selling off after buying on rumors and further drops in U.S. bond yields on Tuesday.
Goldman Sachs strategists believe the reason for the dollar’s decline is that investors view tariffs as another source of near-term policy uncertainty, with signs of fatigue emerging in the U.S. data due to this pressure.
The Mexican peso fell by 1.5% at one point on Tuesday, hovering around the level of 21 pesos to 1 dollar, as the currency continued its decline following Mexican President Claudia Sheinbaum’s announcement of retaliatory measures to be declared on Sunday.
With the escalation of the trade war, European automaker stocks are on the decline.
As of the afternoon trading in Frankfurt, the STOXX 600 Automobiles & Parts index dropped by 5.2%, while the overall market fell by 1.7%.
Companies experiencing the largest declines include Stellantis NV, owner of Jeep and Ram brands, BMW Group, and Mercedes-Benz Group.