U.S. stock market plunge as Trump’s tariffs spark fears about a trade war

U.S. stock markets plummeted on Tuesday morning as a new global trade war began.

China and Canada announced new retaliatory measures on Tuesday after President Trump’s long-promised tariffs took effect overnight. Trump imposed a 25% levy on most imports from Canada and Mexico, with an additional 10% tariff on Canadian energy exports. Tariffs on Chinese goods were increased from 10% to 20%.

U.S. investors continued a selloff that had started on Monday after Trump announced that there was “no room left” for negotiation with Mexico or Canada.

The Dow fell 1.8%, or more than 770 points in mid-morning trading on Tuesday. The Nasdaq and S&P 500 also dropped more than 1.5%. The price of bitcoin fell below $83,000, shedding all of its gains from a weekend rally after Trump said he would create a U.S. “strategic reserve” of cryptocurrencies, including Bitcoin.

Canada, Mexico, and China are the country’s three largest trading partners. The escalating trade war is likely to result in consumers paying higher prices for a wide range of products, including fruits and vegetables, flat-screen TVs, and auto parts.

Shares of major U.S. automakers Ford and GM also plunged on Tuesday. So did the shares of Best Buy and Target, as those large retailers warned that the new tariffs could increase the prices their customers pay.