(Reuters) -Wall Street's main stock indexes tumbled late Monday to end sharply lower after President Donald Trump announced the start of 25% tariffs on Canada and Mexico.
Trump said on Monday that there was no chance for Mexico or Canada to prevent 25% tariffs from taking effect on Tuesday.
"They're going to have to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs," Trump said at the White House.
The S&P 500 lost 1.75%, to end at 5,850.31 points, while the Nasdaq Composite lost 2.64%, closing at 18,350.19. The Dow Jones Industrial Average fell 1.47%, to 43,197.30.
The Canadian dollar and Mexican Peso each fell to a one-month low against the U.S. dollar.
COMMENTS:
TIM HOLLAND, CHIEF INVESTMENT OFFICER, ORION, OMAHA, NEBRASKA
“I take the President at his word; tariffs are going into effect. Going back to the President's prior comments, I assume the administration wants to work towards some sort of constructive resolution with Canada and Mexico, in particular.
“I assume tariffs are going into effect, but they will not remain in effect. Some agreements will be reached around border security and some of the other issues the administration has raised. Until then, the markets will, and have been, and will continue to be unsettled and buffeted by the geopolitical headlines. But I assume we're going to get to the other side of this.
“Markets do hate uncertainty, and I think we will have to live with the volatility and uncertainty tied to political risk and trade in particular, until we get to the other side.”
GINA BOLVIN, PRESIDENT, BOLVIN WEALTH MANAGEMENT GROUP, BOSTON (via email)
“We expected more volatility this year after back to back gains for the S&P of more than 20% .The market is used to getting its way, and now, with a lack of a short term catalyst to move the market higher, investors should prepare for more volatility. While momentum stocks are unwinding, 2025’s theme will be rotation, the lifeline of a healthy market. We’re neutral on tech but that’s still 35% of the S&P 500. Other non tech areas may continue to show strength.
Consumers are cranky about stubborn inflation and tariffs aren’t helping their confidence. But not much fundamentally has changed yet; earnings have hung in there, the Fed’s next move is a cut, and while growth is slowing, we don’t see a recession this year. For investors, 2025 can still be a positive year for stocks, but it may take all year to realize gains. And they may be modest. I’m still a bull.”
JOHN DOYLE, CEO, MONEX USA, WASHINGTON, DC
"I think the direction of the (peso and Canadian dollar) market move was correct and what you would expect with a major announcement like this, but I think in terms of the percentage of the move and how long it's lasted, it's fairly muted."
"I think likely just because of how quickly there's been an about face in previous tariffs announcements that you might not be fully buying that they'll actually go into effect. So I think that that's why you're seeing that muted response or kind of a collective shoulder shrug on the headlines."
JAMIE COX, MANAGING PARTNER, HARRIS FINANCIAL GROUP, RICHMOND, VA
“Markets were looking for another 11th hour deal to further delay tariffs, but aren't going to get one this time. The threat of tariffs has run its course for now, so the next phase is to endure them. Markets have to price that reality, and those numbers are painted red.”
THOMAS MARTIN, SENIOR PORTFOLIO MANAGER, GLOBALT INVESTMENTS, ATLANTA GEORGIA
“It seems that tariffs are definitely going to go through and it increases the chances of a real economic fallout. The markets are not psyched to stick around for that”
“To say ‘no room’ for negotiation is a hard line, a definitive statement. So markets are saying ‘maybe Trump will do implement tariffs. It’s just increasing the probability of a worse outcome. So asset managers want to be out (of stocks) and see how things transpire”
TIM GHRISKEY, SENIOR PORTFOLIO STRATEGIST, INGALLS & SNYDER NEW YORK
“This really in Trump's hands, the fact that he's basically saying he’s going to put tariffs on Canada and Mexico and there's nothing they can do about it.”
“This is a bit of a meltdown here. And I think the pressure’s on Trump to stop it. But I don't know if that's in his DNA or not.”
“I think we've all been taught that nobody wins in a tariff war, and Trump's basically saying it's going to happen no matter what.”
“And I don't see how that solves anything.”
“You know, unless he backs away from the from this tariff war it can hit all sorts of industries.
"We rely on commerce with Canada and with Mexico. You just can't flip a switch and all of a sudden replace that with production from the U.S.”
“It's really short sighted of Trump. This whole tariff war, I don't think it solves anything or helps anybody.”
PETER TUZ, PRESIDENT, CHASE INVESTMENT COUNSEL, CHARLOTTSEVILLE, VIRGINIA
“Today the realization hit some people that tomorrow we will see tariffs. That brings with it uncertainty as far as the earnings of some companies as well as the overall direction of the U.S. economy. I think there was some hope that before they were implemented there would be deals struck with the affected parties and we wouldn’t see them.”
“We're kind of going into a brave new world here of tariffs on several countries and it's just really hard to determine two things: the reaction of the U.S. consumer to tariffs, and the earnings and results of companies that will be affected by the tariffs. So I think the world is taking a step back and is going to re-evaluate as appropriate.”
(Compiled by the Global Finance & Markets Breaking News team)
