Stocks plunged during afternoon trading on Wall Street on Tuesday following U.S. President Donald Trump’s threat to impose new tariffs on eight NATO members amid escalating tensions over his push to establish American authority over Greenland. The S&P 500 experienced a significant decline of 2.1 percent, marking its largest drop since October. This reaction came as U.S. markets reopened after being closed on Monday for Martin Luther King Jr. Day.
The Dow Jones Industrial Average plummeted by 877 points, equivalent to a 1.8 percent decrease, by 2:46 p.m. ET, while the Nasdaq composite also saw a sharp decline of 2.4 percent. Similar downward trends were observed in European and Asian markets.
Canada’s primary stock index faced broad-based losses, with the S&P/TSX composite index dropping 340.68 points to 32,750.28. The market downturn was led by technology stocks, which hold significant influence due to their substantial values. Retailers, banks, and industrial companies also experienced notable declines.
Key market players such as Nvidia, Amazon, JPMorgan Chase, and Caterpillar experienced declines of 3.6 percent, 3.7 percent, 2.9 percent, and 3 percent, respectively. In contrast, companies focusing on consumer staples, like Colgate-Palmolive and Campbell’s, showed more resilience, with gains of 1.5 percent and 1.7 percent, respectively.
The price of U.S. crude oil rose by 1.5 percent to reach $60.34 per barrel, while Brent crude, the global benchmark, increased by 1.3 percent to $64.76.
Trump’s announcement of a 10 percent import tax on goods from several European countries, including Denmark, Norway, and the United Kingdom, triggered the market downturn. This move caused European markets to stumble, with Treasury yields also rising in response.
The ongoing trade tensions led to record highs for silver and gold as investors sought safe-haven assets amid geopolitical uncertainties. Gold surged by 3.7 percent, and silver soared by 6.9 percent. The trade conflict also impacted bitcoin, which saw a drop from above $96,000 to around $89,300.
In the bond market, Treasury yields showed mixed movements, with the 10-year Treasury yield rising to 4.29 percent and the two-year Treasury yield slipping to 3.59 percent.
Trump’s aggressive stance regarding Greenland was reportedly influenced by his dissatisfaction with not receiving the Nobel Peace Prize last year. This stance has further strained relations between the U.S. and its allies, particularly regarding Greenland’s sovereignty, a self-governing territory under Denmark.
The international community, particularly in Europe, has expressed outrage over Trump’s tariff threats, prompting discussions on potential countermeasures, including retaliatory tariffs and the possible use of the European Union’s anti-coercion instrument.
The escalating trade and political tensions with Europe coincide with world leaders gathering for the annual World Economic Forum meeting in Davos, Switzerland. Despite the market volatility, analysts suggest that negotiations and tensions may ease over time, diminishing the impact of the tariff threats on global economies.