Stocks Nosedive to the Worst Level of 2025 as Trump Waffles on Tariffs

​Another sharp sell-off on Wall Street sent the Nasdaq into correction territory—meaning it was 10 percent below its recent peak—on Thursday, while the S&P 500 had its worst trading day of the year.

The Context

It was the fourth day in a row that stocks plunged amid the market turmoil related to President Donald Trump‘s whiplash on the U.S.’s tariffs on its biggest trading partners, Canada and Mexico.

When asked whether his delays on tariffs reflected the slump for the stock market, Trump said Thursday, “I’m not even looking at the market.” He earlier in the Oval Office blamed the falling prices on “globalist countries and companies that won’t be doing as well because we’re taking back things that have been taken from us many years ago.”

What To Know

The S&P 500 dropped 1.8 percent, while the Nasdaq plunged 2.6 percent. The Dow Jones Industrial Average fell by 1 percent. The S&P 500’s second-worst trading day of the year occurred just three days ago, with a decline of 1.76 percent, as Trump’s trade war loomed.

Trump granted another temporary reprieve to Mexico and Canada on Thursday, saying he would delay imposing tariffs on products from the two countries that are covered under the USMCA trade agreement.

But the market remained volatile as concerns grew that an escalating global trade war could slow economic growth and worsen inflation.

The tech sector was hit particularly hard as AI companies saw significant losses that dragged the market as a whole down.

Trump made tariffs a key pillar of his economic platform during the 2024 election and made good on his threat to impose steep tariffs on Mexico and Canada on Tuesday.

He also raised an initial 10 percent tariff on China that went into effect in February. Canada and China responded with retaliatory tariffs of their own, while Mexico said it would issue its response by Sunday.

The market immediately reacted to the tariffs; the Dow dropped 1.55 percent, or 670 points, adding to a 650-point plummet on Monday. The Nasdaq closed 0.35 percent down and at its lowest was down 2 percent, briefly entering correction territory before recovering.

Trump, for his part, has previously acknowledged that Americans could feel “some pain” associated with tariffs but insisted it would “all be worth the price that must be paid.”

Canadian Prime Minister Justin Trudeau didn’t mince words when responding on Tuesday to the tariffs.

“A fight with Canada will have no winners,” he said, adding that the trade was “very dumb.”

Trump started backtracking on tariffs on Wednesday, saying there would be a carveout for U.S. automakers who could be hit hardest by a trade war.

On Thursday, the president announced that Mexican goods that fall under the USMCA would not be subject to tariffs until next month, adding that he made the accommodation “out of respect for [Mexican President Claudia Sheinbaum].”

“Our relationship has been a very good one, and we are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the United States and, likewise, stopping Fentanyl,” Trump added.

Later in the day, Trump signed an executive order saying that Canadian goods covered by USMCA would also be granted a reprieve for another month and added a carveout for Canadian potash.

What People Are Saying

Yung-Yu Ma, chief investment officer at BMO Wealth Management, told the Associated Press: “These exemptions don’t do much to resolve the general air of uncertainty. Businesses will still be cautious in the current environment until a lot more of the tariff picture is clear.”

Strategists at BNP Paribas told the AP: “Much will depend on whether these new tariffs prove temporary or are toned down. But even if they are ultimately removed, we anticipate lasting damage to global economic activity.”

What Happens Next

Wall Street will be looking at the U.S. Labor Department’s jobs report, set for release on Friday, which will reveal how many workers U.S. employers hired last month.

A strong job market, coupled with robust consumer spending, has played a critical role in preventing a recession so far. Economists anticipate an acceleration in hiring for February, signaling continued resilience in the labor market.

Reporting by the Associated Press contributed to this article.

This is a developing news story and will be updated as more information is available.

Update: 3/6/25, 5:15 p.m. ET: This article has been updated with more information.