The Dow dropped more than 100 points on concerns about new U.S. tariffs on Canada, Mexico and especially China. The index fell 0.3%, the S&P 500 and the Nasdaq Composite followed, dropping 0.6%. Markets have already lost more than 2% this week after Canada and China announced retaliatory tariffs, and Mexico is set to announce its own measures soon.
The market had risen on Wednesday after the White House granted a one-month delay on tariffs for automakers that were complying with the U.S.-Mexico-Canada Agreement (USMCA). However, the stocks began to fall again when Commerce Secretary Howard Lutnick indicated that other industries might also be eligible for exemptions. He also said that Mexico and Canada might be able to avoid the reciprocal tariffs if they took enough measures to prevent fentanyl from being shipped to the United States.
This together with other factors led to a lot of price changes in the market especially for semiconductor stocks. Marvell Technology dropped by 18% after it gave a weak first-quarter guidance and other stocks such as ON Semiconductor, Taiwan Semiconductor and Nvidia also followed a similar trend. This was due to the fact that the broader market was still reeling from the impact of the undoing of the artificial intelligence trade, an area which has been a major driver of the market’s gains in the past year.
Economic data has been on the negative side recently, with fears that President Donald Trump’s trade policies are likely to stunt U.S. economic growth. The Beige Book from the Federal Reserve and the ISM’s manufacturing report both showed rising input costs, all thanks to tariffs. Furthermore, layoffs are on the rise and the reason being given for the increases are policy-based workforce reductions. The market watchers are now waiting for the important employment report on Friday to get a clearer picture of the economy.
