Major markets are continuing their downward plunge after President Donald Trump implemented steep tariffs against three of the country’s most important trade partners: China, Mexico, and Canada. The Dow Jones has fallen over 600 points in 24 hours, the NASDAQ briefly found itself near correction territory, and the S&P has lost over a month of positive gains in less than a day.
Trump promised throughout his 2024 campaign that his presidency would be a boon for the stock market and that he would bring costs down for Americans. “On day one, we will end inflation and make America affordable again, to bring down the prices of all goods,” he said in October.” He also vowed to lower the cost of energy, increase automobile manufacturing, and lower housing costs. The odds of any of this being accomplished under a regime of strict trade penalties for the country’s largest trade partners are incredibly slim. Target and Best Buy have both already warned that the tariffs will cause prices to increase.
The White House indicated in February that Trump would be “implementing a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China” and that “energy resources from Canada will have a lower 10% tariff.” On Monday night, Trump announced that he would allow his planned levies on the three countries to go into effect at midnight. Fox News viewers actually got to watch markets begin to nose dive in real time on the network’s live market tracking graphic as Trump spoke at a press conference.
In response, Canada announced it would be implementing matching, retaliatory tariffs on over $30 billion in American imports, including hefty taxes on energy purchased from the Ontario region by states bordering the Great Lakes. Mexico plans to announce its own retaliatory tariffs on Sunday.
“It’s not in my habit to agree with The Wall Street Journal, but Donald, they point out that even though you’re a very smart guy, this is a very dumb thing to do,” Canadian Prime Minister Justin Trudeau said on Tuesday.
“To the American people. We don’t want this […] but your government has chosen to do this to you,” Trudeau said. “They’ve chosen to raise costs for American consumers on everyday essential items like groceries and gas, on major purchases like cars and homes and everything in between. They’ve chosen to launch a trade war that will, first and foremost, harm American families. They’ve chosen to sabotage their own agenda that was supposed to usher in a new golden age for the United States.”
Trump responded on Truth Social, writing: “Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!”
Mexican President Claudia Sheinbaum Pardo said that there is “no reason, rationale or justification to support this decision that will affect our people and nations,” adding that “nobody wins” in a trade war.
On Monday, The Wall Street Journal’s editorial board excoriated the president in a blistering opinion piece. “Unbridled Tariff Man was always going to be a big economic risk in a second term, and here we are,” they wrote. “We’ve courted Mr. Trump’s ire by calling the Mexico and Canada levies the ‘dumbest’ in history, and we may have understated the point. Mr. Trump is whacking friends, not adversaries.”
When asked if he expected consumer prices to increase as a result of the tariffs, Treasury Secretary Scott Bessent coyly suggested that there was “going to be a transition period,” before markets stabilized.
Trump is scheduled to appear before a joint session of Congress on Tuesday that is not officially a State of the Union Address, but will contain much of the same trappings — including plenty of self-aggrandizing about his so-called accomplishments. As Americans brace for higher grocery bills, energy costs, and economic uncertainty over Trump’s impulse to pick a fight with his economic allies, the president is preparing to get on stage and lie to their faces about his imaginary golden age of prosperity.
