U.S. stocks dropped on Tuesday, extending losses suffered a day earlier amid a fresh round of tariffs on Canada and concern about a possible recession.
The Dow Jones Industrial Average closed down about 475 points, or 1.15%, while the S&P 500 fell 0.75%. The tech-heavy Nasdaq ticked down 0.15%.
The selloff on Tuesday extended a days-long market decline touched off by U.S. tariffs imposed last week on Canada, Mexico and China, some of which were delayed.
President Donald Trump on Tuesday announced retaliatory measures on Canada after Ontario slapped a 25% tariff on electricity sent to the U.S., saying that he is imposing an additional 25% tariff on steel and aluminium, bringing those tariffs to 50%.
Hours later, Ontario Premier Doug Ford issued a joint statement with U.S. Commerce Secretary Howard Lutnick on X announcing the suspension of the 25% surcharge on electricity sent to the U.S.
The withdrawal of the surcharge came alongside an agreement to hold a meeting at the White House on Thursday to discuss a renewal of the trade agreement between the U.S. and Canada, the statement said.
The increased tariffs on steel and aluminium are still expected to go into effect on Wednesday as planned, White House spokesperson Kush Desai told ABC News Tuesday afternoon.
The tit-for-tat marked the latest in a global trade war that intensified a day earlier, when China slapped retaliatory tariffs on the U.S., deepening trade tensions between the world’s two largest economies.
On Monday, the tech-heavy Nasdaq plummeted 4%, recording its worst day of trading since 2022. The Dow Jones Industrial Average and S&P 500 each dropped more than 2% on Monday.
The market drawdown on Monday extended losses from last week. The S&P 500 recorded its worst week since September.
When asked about a potential recession in an interview broadcast on Sunday, Trump said tariffs imposed in recent days could bring about a “period of transition.”
“I hate to predict things like that,” Trump told Fox News in an interview recorded on Thursday. “It takes a little time, but I think it should be great for us.”
In response to a question later on Sunday about his reluctance to rule out a recession, Trump said: “I tell you what, of course, you hesitate. Who knows?”
The Bureau of Labor Statistics is expected Tuesday morning to release a report on how many jobs are open in the economy, which could provide another clue about the strength of economy amid the new recession concerns. An inflation report is expected on Wednesday.
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