- The Dow Jones lost 550 points on Tuesday, falling to 42,600.
- Trump’s new and improved trade war kicked off with new tariffs on Canada and Mexico.
- US data remains limited through the midweek as politics and policy headlines dominate.
The Dow Jones Industrial Average (DJIA) tumbled 700 points at its lowest on Tuesday as investor sentiment hits the floorboards. After the initial sticker shock on new import taxes, markets recovered some footing, but the Dow Jones remains down around 550 points.
United States (US) President Donald Trump has kicked off his second, bigger global trade war by imposing a stiff 25% tariff on all imported goods from Canada and Mexico, as well as adding on an additional 10% import tax on China, bringing China’s tariff total to 20%. Further tariff packages are still in the oven, with the Trump administration planning to target aluminum, steel, agriculture goods, foreign cars, copper, and lumber.
Rate markets are now pricing in around 100 bps of interest rate cuts through the end of the year, with the first quarter-point rate trim expected in June. ADP Employment Change figures are due on Wednesday and will serve as a preview of this Friday’s upcoming Nonfarm Payrolls (NFP) jobs report. Markets will be watching economic figures with renewed anxiety as investors hunker down for negative impacts from President Trump’s sweeping tariff packages.
Dow Jones news
The overwhelming majority of securities listed on the Dow Jones are in the red on Tuesday, with slim recovery gains in UnitedHealth (UNH) and Nvidia (NVDA), which gained around 1.8% and 1.1%, respectively. UNH is trading back above $475 per share, while Nvidia is grappling with $115.
Boeing (BA) tumbled 5.5% to $160 per share, with American Express (AXP) and 3M (MMM) falling around 4.5% apiece, to $281 and $146 per share, respectively. Entire industry sectors are falling back in their own reactions to tariffs, with key losses concentrated in financials.
Dow Jones price forecast
Tuesday’s backslide puts the Dow Jones Industrial Average on pace to make contact with the 200-day Exponential Moving Average (EMA) near 42,060 for the first time since November of 2023. The Dow Jones has fallen nearly 1,700 points in two days top-to-bottom, shedding 3.8% in the process.
Momentum is fully in the bears’ control in the near-term, but the 42,000 price handle could prove to be a major challenge to further downside unless market fundamentals continue to roil. Technical oscillators remain in oversold territory, and could signal a prime opportunity for a bullish recovery if bidders gather themselves in time.
Dow Jones daily chart
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
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