The aggressive move, which takes effect in two months, marks a sharp escalation compared to Trump’s first term when similar tariff hikes took nearly two years.
Adding to the uncertainty, the U.S. announced it would cut financial and military aid to Ukraine, a move that has drawn mixed reactions from global policymakers.
U.S. stock markets reacted immediately. The Dow surged 300 points at the open but crashed 1,100 points within hours.
DJI chart. Source: TradingView.
The S&P 500 lost $1.5 trillion in market capitalization in less than five hours.
Tech, manufacturing, and retail stocks—sectors heavily reliant on Chinese imports—bore the brunt of the sell-off.
Analysts warn the tariffs could raise costs for businesses and consumers, driving up prices on goods like electronics and clothing.
Gold Glitters in Uncertainty
While stocks tumbled, gold prices ticked up 0.3% to near $2,900 per ounce, distancing from last week’s lows.
“The market has to reprice these tariff risks now that they have become a reality,” said Kathleen Brooks, research director at XTB. “Markets may remain jittery for the next few days as we wait for the U.S. payrolls report on Friday.”
“Gold price is higher by another $20 today and is closing in on the $3000 an ounce level. We could see further record highs in gold in the coming weeks,” she added.
Stock Sell-Off Could Continue
Trump’s tariffs on Mexico and Canada caught investors off guard, triggering a broader sell-off in U.S. financial markets.
“Tariffs sudden implementation has been met with an immediate response and sharply escalates the risk of an all-out global trade war between America and the rest of the World,” said Lindsay James, investment strategist at Quilter Investors.
Mexico, which produces 15% of U.S.-destined cars for brands like General Motors, Ford, and Chrysler, could see major economic fallout.
James noted that Trump had previously suggested that companies should move production to the U.S. but warned, “This is a lengthy, cumbersome, and disruptive process for businesses.”
The total market cap plunged from over $3.1 trillion to below $2.6 trillion, marking the second-worst sell-off of 2025.
A Bank of America survey showed 42% of respondents now see trade wars as the biggest risk for 2025.
The tariff hike, combined with the U.S. pulling support from Ukraine, overshadowed TSMC’s $100 billion investment, shifting markets into risk-off mode.
Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors.
Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.
