Dow drops over 600 points, S&P slumps as trade tensions escalate; automakers’ shares fall, while NVIDIA continues slide

Investor concerns about the economy grew as President Donald Trump’s tariffs on Canada, Mexico, and China triggered retaliatory measures and went into effect on Tuesday, causing US stocks to continue to fall on Tuesday.

The Dow Jones Industrial Average fell 647 points, marking a 1.5% decrease.

Both the S&P 500 and the Nasdaq Composite experienced declines, with the former shedding 1.5% and the latter losing 1.4%.

The Nasdaq’s drop has brought the tech-heavy index close to correction territory, defined as a 10% fall from a recent high.

The US imposed 25% duties on Canada and Mexico, and an additional 10% tariff on Chinese goods on Tuesday. 

China responded with up to 15% tariffs on some US products, while Canada will impose a 25% levy on US goods.

Mexico will announce tariffs and other responsive measures this weekend. These events resulted in Tuesday’s market drawdown.

Investors had hoped that a last-minute deal could be reached to avoid the full taxes on Mexico and Canada, but losses deepened on Monday after Trump confirmed the long-awaited levies were coming. 

This week’s sell-off pushed the S&P 500 into the red for 2025 and the Dow near flat on the year.

“While Tuesday’s tariffs are a go, it remains very unclear on just how long these tariffs will remain,” Clark Geranen, chief market strategist at CalBay Investments, told CNBC.

We tend to believe these are more of a negotiation tactic and not the start of a long and drawn out reciprocal trade war. Still, in these situations, investors sell first and ask questions later.”

Automaker stocks fall amid tariff concerns

Shares of major American automakers, including Stellantis, Ford Motor, and General Motors, experienced declines following a statement from the American Automotive Policy Council (AAPC), a lobbying group representing these companies. 

The AAPC urged the Trump administration to exempt companies that adhere to the United States-Mexico-Canada Agreement (USMCA) from proposed tariff increases.

The USMCA, signed during Trump’s presidency, replaced the North American Free Trade Agreement (NAFTA). 

The AAPC argues that companies complying with the new trade agreement should not be subject to additional tariffs.

Investors reacted negatively to the news, with Stellantis experiencing the most significant drop at 3.4%. 

GM and Ford also saw declines of over 3% and 2%, respectively. 

This suggests that the market is concerned about the potential impact of tariffs on the automotive industry, particularly for companies with significant cross-border supply chains and operations.

The market reaction also reflects broader concerns about the potential for a trade war between the United States and its trading partners. 

Such a conflict could disrupt global supply chains and lead to higher prices for consumers.

NVIDIA continues to fall

NVIDIA’s shares experienced a 3% drop, adding to the chipmaker’s significant decline of nearly 9% on Monday. 

This downward trajectory was triggered by Trump’s decision to impose tariffs on Canada and Mexico starting Tuesday. 

Investors are increasingly apprehensive about the potential ramifications of these tariffs and heightened export restrictions on NVIDIA’s business operations in China. 

The sell-off on Monday caused NVIDIA’s market value to plummet to $2.79 trillion, with its shares reverting to the same price level as last September. 

The escalating trade tensions and the possibility of retaliatory measures from China have cast a shadow of uncertainty over NVIDIA’s future prospects, particularly concerning its revenue streams and market share in the crucial Chinese market.

Tesla falls

Tesla’s stock experienced a 7% dip due to a significant decline in sales figures from China.

Data released by the China Passenger Car Association revealed that Tesla’s sales of vehicles produced in China plummeted by almost 50% in February compared to the same period last year. 

This marks a substantial decrease in sales for the electric vehicle manufacturer, with total sales of China-made Tesla vehicles barely surpassing 30,000 units – the lowest figure in over two years. 

This downturn raises concerns about Tesla’s performance in the crucial Chinese market, which has been a major driver of the company’s growth in recent years. 

The decline in sales could be attributed to various factors, including increased competition from domestic Chinese EV manufacturers, supply chain disruptions, and changing consumer preferences.

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