U.S. stocks tumbled on Monday as growing concerns about the American economy intensified, compounded by President Trump’s unwillingness to dismiss the possibility of a recession. Investors fear that his aggressive trade strategies could be the trigger.
The Dow Jones Industrial Average, which at one point in the afternoon had dropped over 1,000 points, closed at 41,911.71, marking a decline of 890 points, or 2.1%.
Tensions in the ongoing trade dispute between Washington and Beijing escalated further as China enforced retaliatory tariffs on a variety of U.S. agricultural exports. These included a 15% duty on American wheat, corn, and chicken, along with a 10% tariff on soybeans, pork, beef, and fruit—critical exports for American farmers reliant on Chinese demand.
Canada’s largest province, Ontario, also announced on Monday that it would be imposing a 25% surcharge on electricity exports to the U.S. in direct response to American tariffs on Canadian goods.
“Stocks are back in the red as psychology deteriorates further and investors continue to aggressively de-risk,” noted Adam Crisafulli, a market analyst at Vital Knowledge, in a midday report. “The drivers of the weakness are the same that have been weighing on sentiment since the middle of February: concerns about slowing growth, a destructive pro-tariff agenda by Trump (coupled with a high economic/financial pain threshold among White House officials), and elevated valuations.”
The S&P 500 dropped 2.7%, shedding 187 points to land at 5,614.58—its steepest decline of the year. The index had already taken a 3.1% hit the previous week, marking its worst weekly performance since September.
The Nasdaq, heavily weighted toward technology stocks, suffered even greater losses, sliding 4% or 727.9 points, after officially entering correction territory last week. Shares of Tesla plunged over 15%, while Alphabet, Apple, and Nvidia each fell approximately 5%.
The market downturn followed President Trump’s refusal to directly address whether a recession is on the horizon. In an interview aired on Fox News Sunday, he remarked, “I hate to predict things like that. There is a period of transition, because what we’re doing is very big.” Despite this, Commerce Secretary Howard Lutnick assured NBC’s Meet the Press that there is no immediate cause for recession concerns.
Goldman Sachs issued a downward revision to its U.S. economic growth projection for 2025, reducing its previous estimate of 2.4% to 1.7%, citing the mounting economic pressures resulting from the administration’s trade policies.
“We now see the average U.S. tariff rate rising by 10 [percentage points] this year, twice our previous forecast and about five times the increase seen in the first Trump administration,” explained Jan Hatzius, Goldman’s chief economist, in a note to clients.
Last week, the Trump administration implemented 25% tariffs on imports from Canada and Mexico, only to halt the levy days later for products covered under the U.S.-Mexico-Canada trade deal.
The White House continues to assert that upcoming tax cuts and revenue from tariffs will strengthen the economy, despite investor anxiety. Last week’s significant market decline was the worst since Trump’s re-election four months ago.
The S&P 500 has now extended its retreat from the record peak it reached in February. Analysts warn that stock market volatility is likely to persist as uncertainty looms over tariffs, trade policies, and inflation. Some financial experts anticipate inflation will climb, with economists at Goldman Sachs and Morgan Stanley Research recently adjusting their forecasts upward.
“The risks of higher inflation as a result of a broader tariff war have taken a back seat in the overall market view recently, as the risks of slower economic growth have shifted to the forefront,” stated John Canavan, lead U.S. analyst at Oxford Economics.
The administration’s efforts to cut taxes and reduce regulation are designed to revive domestic manufacturing and job creation, yet the long-term impact of Trump’s economic policies remains uncertain.
“Many investors support the president’s pro-growth business agenda, but the administration’s frenetic approach to policymaking is unsettling,” observed Michael Arone, chief investment strategist at State Street Global Advisors.
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