(Updated) Canada and U.S. stock markets plunge for a second day after trade war launched

North American stock markets plunged for a second day as the U.S. imposed broad tariffs on imports from Canada and Mexico, triggering a continental trade war.

The S&P/TSX composite index was down 547.26 points at 24,454.31, after U.S. President Donald Trump's executive order implementing the tariffs took effect at just after midnight.

"Markets are getting crushed today," said Colin Cieszynski, portfolio manager and chief market strategist at SIA Wealth Management. 

"It's not just Canada; it's U.S. markets are getting hammered, European markets are getting hammered, even the Asia Pacific markets were down."

In New York, the Dow Jones industrial average was down 703.20 points at 42,488.04. The S&P 500 index was down 82.70 points at 5,767.02, while the Nasdaq composite was down 181.51 points at 18,168.69.

Trump enacted 25 per cent tariffs on Canadian and Mexican goods, with a 10 per cent levy on energy. The move came after a one-month pause on the tariffs, as Trump dashed hopes Monday that Canada might be able to negotiate its way out of a trade war. 

Investors hate tariffs, said Cieszynski, because they "(pour) sand into the gears of the global economy."

With Canada announcing its retaliatory tariffs as expected, "This is just getting started," he said. "It's still closer to the beginning than it is to the end."

Prime Minister Justin Trudeau said Canada "will not back down" as he announced Canada's retaliatory plan. The plan includes 25 per cent tariffs on a swath of American products including food, alcohol, clothing, cosmetics, furniture, lumber and more. 

The market rout could play out over the next few days, said Cieszynski, "and then at some point things stabilize and people look around to see what the lay of the land is."

"But the question then is, what's the outlook going forward? How much upheaval could this have for the economy and for companies?" 

At least in the short term, Cieszynski said investors clearly expect the trade war to have a significant slowing effect on not just the North American economy, but the global economy. 

The Canadian dollar traded for 68.90 cents US compared with 69.31 cents US on Monday.

The April crude oil contract was down 49 cents US at US$67.88 per barrel and the April natural gas contract was up 37 cents at US$4.49 per mmBTU.

The April gold contract was up US$24.90 at US$2,926 an ounce and the May copper contract was down seven cents at US$4.54 a pound.

This report by The Canadian Press was first published March 4, 2025.