TORONTO — North American stock markets fell for the second consecutive day as the U.S. imposed broad tariffs on imports from Canada and Mexico, triggering what many believe could become a significant continental trade war. The S&P/TSX composite index was down 380.80 points at 24,620.77 during early-afternoon trading on March 4, 2025. This dip followed the implementation of U.S. President Donald Trump's executive order, which took effect just after midnight.
“Markets are getting crushed today,” said Colin Cieszynski, portfolio manager and chief market strategist at SIA Wealth Management. “It’s not just Canada; U.S. markets are getting hammered, European markets are getting hammered, even the Asia Pacific markets were down.”
U.S. markets mirrored this trend, with the Dow Jones Industrial Average down 555.51 points, resting at 42,635.73. The S&P 500 index reported losses of 53.37 points, bringing it down to 5,796.35, with the Nasdaq composite dropping 75.84 points to 18,274.35.
Trump's latest measures saw 25 percent tariffs enacted on Canadian and Mexican goods and 10 percent tariffs on energy products. These moves dashed previous hopes of negotiations, as the tariff imposition came after a one-month pause.
“Investors hate tariffs,” Cieszynski added, noting they “pour sand in the gears of the global economy.” He emphasized, “With Canada announcing its retaliatory tariffs as expected, this is just getting started. It’s still closer to the beginning than it is to the end.”
Canada’s Prime Minister Justin Trudeau responded defiantly, asserting Canada “will not back down” from the trade confrontation. His government's plan includes imposing 25 percent tariffs on various American products, including food, alcohol, clothing, cosmetics, furniture, and lumber.
Cieszynski indicated the market rout may continue over the next few days, stating, “And then at some point, things stabilize and people look around to see what the lay of the land is.”
“But the question then is, what’s the outlook going forward? How much upheaval could this have for the economy and for companies?” he queried, highlighting investor concerns about the longer-term ramifications of the trade war.
According to RBC economists Frances Donald and Cynthia Leach, Canada has experienced its largest trade shock in nearly 100 years. The ultimate economic impact of the tariffs will depend on the duration of their enforcement, they wrote.
Even with uncertainty swirling, there have already been changes: U.S. importers have been stockpiling goods leading up to the tariff deadline. The measures, alongside heightened uncertainty, have resulted in economic concerns for both Canada and the U.S., with growth projected to slow.
On March 4, the Canadian dollar traded at 68.86 cents compared to 69.31 cents from the previous day. Shifts were also evident across commodity prices: The April crude oil contract fell by 27 cents to $68.10 per barrel, whereas the April natural gas contract saw a small uptick of 28 cents, stabilizing at $4.40 per mmBTU. Notably, the April gold contract rose by $21.30 to $2,922.40 per ounce, yet the May copper contract dipped by five cents to $4.57 per pound.
Meanwhile, across Wall Street, stocks tumbled significantly as the trade war escalated, wiping out all gains made by the S&P 500 since the 2016 Presidential Election. The S&P 500 experienced a 1.7% decline, with the Dow Jones Industrial Average dropping 722 points, equivalent to a 1.7% loss.
Reflecting the widespread impacts, even the tech-heavy Nasdaq composite fell by 1.5%, indicating it could potentially face its own correction as it has overall lost 10% from its recent high.
Global markets echoed these concerns, with sharp declines observed across Europe, as Asian markets experienced less severe losses.
The steep sell-off was previously anticipated due to signs of economic weakness, coupled with tariffs sparking fears of higher consumer prices and inflation. Domestic products from Canada and Mexico are now taxed by 25%, with U.S. energy products facing additional duties of 10%. Prior tariffs have also risen, with the 10% tariff on Chinese imports doubled to 20%.
China has retaliated by imposing up to 15% tariffs on key U.S. farm products, including chicken, pork, soy, and beef, reflecting the broader ramifications of the trade tensions. Canada plans to impose tariffs on over $100 billion worth of American goods over the next three weeks.
The tariff impositions prompted warnings from major retailers like Target and Best Buy. Despite reporting earnings above Wall Street's forecasts, Target’s stock fell by 5.4%. Best Buy plunged 14.2% after providing disappointing earnings forecasts, exacerbated by tariff-related concerns.
Best Buy's CEO Corie Barry emphasized the importance of international trade to their business, especially as Mexico and China are primary sources for products sold to consumers. He noted vendors are expected to pass the costs of tariffs onto consumers, raising the likelihood of price increases.
While companies recorded significant fourth-quarter earnings growth of 18% within the S&P 500, Wall Street’s growth forecast for the current quarter has been slashed to around 7%, down from 11% initially projected to begin the year.
Consumer attitudes have turned more pessimistic about inflation, which could dampen overall spending, the key driver behind U.S. economic growth amid rising interest rates.
The Federal Reserve has indicated it may hold rates at their current high levels. The central bank raised rates to their highest point in two decades to combat inflation but has begun cutting them as inflation appears to stabilize. Still, tariffs introduce new variables to the economic equation.
On March 4, the yield on the 10-year Treasury bond fell to 4.12%, down from 4.16% the previous day, reflecting heightened economic concern. Treasury yields are significantly lower than levels reached last month.
This report was contributed to by Matt Ott and Elaine Kurtenbach from the Associated Press.