US stock markets tumbled further on Tuesday after President Donald Trump intensified his trade war by announcing a sharp increase in tariffs on Canadian steel and aluminum, doubling the planned hike to 50%. The move sent Wall Street reeling, with the S&P 500 falling 1.1% in afternoon trading, pushing it nearly 10% below its all-time high set just weeks ago.
The Dow Jones Industrial Average slumped 625 points, or 1.5%, by 1 p.m. Eastern time, extending a brutal stretch of volatility. Meanwhile, the Nasdaq Composite dipped a more modest 0.7%, as Tesla and a few Big Tech stocks managed to limit some of the broader market’s losses, according to news agency AP.
The S&P 500 experienced another sharp intraday swing, flipping from a modest morning gain to a steep 1.2% decline—a pattern that has repeated throughout the past two weeks. This latest bout of wild market fluctuations reflects investors’ growing uncertainty over how much economic pain Trump is willing to inflict through tariffs in his bid to reshape global trade.
Trump suggests Canada should become the ‘51st State’
While announcing the tariff increase, Trump made an eyebrow-raising statement, saying, “The only thing that makes sense is for Canada to become our cherished Fifty-First State. This would make all tariffs, and everything else, totally disappear.”
His remark added to the market’s unease, as businesses and investors struggled to gauge whether further trade restrictions could follow.
Economic warning signs flash as trade uncertainty grows
Beyond the immediate market selloff, Trump’s on-and-off approach to tariffs is beginning to take a toll on consumer and business confidence.
Delta Air Lines, for instance, warned that customer uncertainty is already impacting demand, leading the airline to slash its revenue growth forecast for the first quarter of 2025 from 7%-9% down to 3%-4%. Delta’s stock plummeted 8.5% in response.
Similarly, Southwest Airlines lowered its revenue forecast, citing reduced government travel, California wildfires, and weaker demand trends. However, its stock managed to jump 8.7%, as the airline announced new baggage fees and loyalty program adjustments to boost revenue.
Meanwhile, Oracle dropped 3.7% after reporting disappointing quarterly earnings, adding to the broader market’s woes.
Tesla rallies after Trump pledges to buy one
Amid the turmoil, Tesla shares rose 2.1% after Trump publicly declared his intention to purchase a Tesla vehicle as a show of support for Elon Musk’s company. Tesla’s stock has been under heavy pressure in 2025, down 43.8% year-to-date, partly due to Musk’s involvement in federal budget-cutting efforts.
Other Big Tech stocks, which powered the S&P 500 to record highs last year, showed relative stability. Nvidia gained 1%, though its year-to-date loss remains at 19.6%, as Wall Street rethinks its overheated enthusiasm for artificial intelligence stocks.
Markets await clarity amid sell-off
The tech sector’s relative resilience has been one of the few bright spots in an otherwise turbulent market environment. Just seven megacap stocks—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—accounted for more than half of the S&P 500’s total gains in 2024. However, analysts at Citi warn that “US exceptionalism is at least pausing”, suggesting that the AI boom may not be enough to offset the broader economic uncertainty in the coming months.
International stock markets mirrored Wall Street’s struggles, with major European and Asian indices mostly posting declines. However, in China, Shanghai’s composite index rose 0.4%, as the Chinese government wrapped up its annual national congress with promises of economic stimulus measures.
Meanwhile, US Treasury yields steadied after recent declines, with the 10-year yield rising slightly to 4.24%. The bond market has been under pressure in recent months, reflecting growing concerns about economic slowdown risks.
US job market remains strong
Amid the market chaos, a new report showed that US employers posted 7.7 million job openings in January, matching economist expectations. While the job market remains solid for now, ongoing trade disruptions and market uncertainty could have long-term economic consequences.