Stock markets already in freefall amid U.S. tariffs on Canada

Stock markets in the U.S. and Canada continue to fall as U.S. President Donald Trump followed through on threats to impose tariffs.

On Sunday, U.S. President Donald Trump issued an executive order that lifted the 30-day pause on tariffs. U.S. Commerce Secretary Howard Lutnick said the U.S. will impose 25 per cent tariffs on Canada on Tuesday.

The effect was felt instantly, sending ripples through North American stock markets on Monday.

In Canada, BNN Bloomberg reports that the S&P/TSX Composite Index closed down 391.88 points, or 1.5 per cent. Barron's reports that the Dow fell by 780 points (or 1.8 per cent), the S&P 500 dropped by 2 per cent, and the Nasdaq Composite fell by 2.7.

But there were steeper drops as stock markets opened on Tuesday morning.

In Canada, the S&P/TSX Composite Index dropped 634 points or 2.54 per cent. The S&P 500 dropped 100.86 points, or 1.77 per cent. The Dow fell 755.31 points, or 1.75 per cent, while the Nasdaq Composite fell 271.46, or 1.42 per cent.

Both countries are now bracing for a trade war as Prime Minister Justin Trudeau announced Monday that Canada will impose 25 per cent retaliatory tariffs against American goods worth $155 billion.

"Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures," he said.

Experts have been sounding the alarm on the broad impact of tariffs on housing, food prices, and the job market.

While addressing the Mississauga Board of Trade-Oakville Chamber of Commerce on Feb. 21, Bank of Canada Governor Tiff Macklem warned that sweeping tariffs could weaken Canada's economy, essentially wiping out economic growth in the next two years.

"In our January projection with no tariffs, we forecast growth of about 1.8 per cent in both 2025 and 2026," said Macklem. "But in the tariff scenario, the level of Canadian output falls almost three per cent over two years. That implies tariffs would all but wipe out growth in the economy for those two years."