US stocks end lower as Trump's tariffs on Canada, Mexico take effect

By Mucahithan Avcioglu

ISTANBUL (AA) - US stocks closed with losses Tuesday after President Donald Trump's 25% tariffs on Canada and Mexico took effect.

Trump also doubled tariffs on China from 10% to 20% on Tuesday, fueling fears of an escalating global trade war.

The three countries responded with retaliatory measures, vowing further duties on American goods.

Canadian Prime Minister Justin Trudeau said Canada will impose 25% tariffs against C$155 billion ($107 billion) worth of American goods, Mexican President Claudia Sheinbaum said that retaliatory tariffs on the US will be announced on Sunday, and China imposed additional tariffs of 10%-15% on imports of some US farm products.

Companies with large imports saw pressure on their stock prices. Ford and GM's shares fell about 3% and over 4%, respectively. Chipotle saw a 2% decline, with over half of their avocados coming from Mexico. Retail chain Target lost nearly 3%.

On the macroeconomic data side, the ISM's Manufacturing Purchasing Managers' Index (PMI) declined to 50.3% in February, down 0.6% from January's 50.9% and the market forecast of 50.6%.

Personal consumption expenditures in the US decreased by 0.2% in January, contrary to expectations for an increase.

The US goods trade deficit also hit a record high in January, reaching $153.3 billion, up 25.6% compared to the previous month.

The Dow Jones Industrial Average dropped 1.55%, or 670.25 points, to end the day at 42,520.99.

The S&P 500 fell 1.22%, or 71.57 points, to 5,778.15.

The Nasdaq Composite slid 0.35%, or 65.03 points, to 18,285.16.

Meanwhile, the VIX Index, also known as the “fear index," rose 3.2% to 23.51.