Global markets experienced a tumultuous start to the week as the U.S.-China trade war intensified with new tariffs. On Monday, the S&P 500 recorded its worst day of 2025, suffering a dramatic sell-off following President Trump's decision to impose an additional 10% tariff on Chinese imports, effectively doubling the previously established duty. In swift retaliation, China announced tariffs of up to 15% on certain U.S. goods, including soybeans and corn, set to take effect on March 10. The move sent ripples through the stock market, affecting major corporations such as Ford, General Motors, and Chipotle.
The president's decision to double tariffs on Chinese imports stems from his administration's strategy to address the persistent U.S. trade deficit. President Trump has consistently framed this deficit, particularly with China and the European Union, as a pressing national security threat. In 2024 alone, total U.S. goods trade with the EU reached $975 billion, resulting in a goods trade deficit of $235.6 billion. By increasing tariffs, the administration aims to reduce this imbalance.
The impact of the tariffs was immediate and widespread. U.S. corn and soybeans are now subject to a 15% and 10% levy, respectively. These measures are part of China's retaliatory strategy, which also includes a series of new export controls aimed at curbing American economic influence. The announcement has raised concerns among U.S. agricultural producers about their competitive edge in the Chinese market.
Markets reacted sharply to these developments. The S&P 500's plunge on Monday was mirrored in individual company performances. Ford and General Motors saw their stocks decline further in Tuesday's premarket trading, continuing a downward trend that has persisted throughout the year. Chipotle also experienced a nearly 10% drop in 2025, largely due to its reliance on Mexican avocados, highlighting the broader impact of trade tensions on various sectors.
Canada joined the fray by announcing its own set of tariffs on U.S. goods. Ottawa will impose a 25% tariff on C$155 billion ($107 billion) worth of American products immediately, with plans to extend duties on an additional C$125 billion ($86.7 billion) after a 21-day period. This move further complicates the North American trade landscape and adds pressure on U.S. exporters.
The escalation of tariffs has intensified fears of a prolonged trade war that could have severe implications for global economic stability. Analysts warn that sustained tensions between major economies could disrupt supply chains and lead to increased costs for businesses and consumers alike. The situation remains fluid as governments assess their positions and potential avenues for negotiation.