The stock rally, driven by optimism of progress on tariff deals with U.S. trading partners, lost steam on Tuesday afternoon, with the three major indexes all closing in the red.
The Dow Jones Industrial Average fell more than 300 points, easing from the 1,400 point jump at the opening bell. The S&P 500 and Nasdaq Composite were down 1.5% and 2.1%, respectively.
Stocks were higher earlier in the trading session after President Donald Trump said that he held a call with South Korea, discussing tariffs and other trade-related topics.
“I just had a great call with the Acting President of South Korea,” Trump said in a post on Truth Social. “We talked about their tremendous and unsustainable Surplus, Tariffs, Shipbuilding, large scale purchase of U.S. LNG, their joint venture in an Alaska Pipeline, and payment for the big time Military Protection we provide to South Korea.”
However, the White House signaled that new tariffs on Chinese imports are taking effect after China’s government missed a deadline to lift its retaliatory tariffs that were imposed in response to Trump’s tariffs.
White House press secretary Karoline Leavitt said Tuesday that because China declined to lift its retaliatory tariff, the president’s additional 50% tariff levied on top of previously imposed tariffs of 20% and 34% took effect, bringing the total tariff on Chinese goods to 104%.
She added that the tariffs took effect at noon Eastern Time on Tuesday, with tariff collection set to begin on Wednesday. Leavitt said that U.S. trading partners should be coming to the administration with deals to improve trade terms.
“The president’s message has been simple and consistent from the beginning to countries around the world – bring us your best offers and he will listen,” Leavitt said during a White House press briefing Tuesday. “Deals will only be made if they benefit American workers and address our nation’s crippling trade deficits.”
Tuesdays losses follow three prior sessions of stocks trading in the red that were sparked by Trump’s tariff policy that was rolled out last week.
Stocks seesawed Monday, with the major indexes mixed at the closing bell. The Dow fell 349.26 points, or 0.91%, while the S&P 500 slid 0.23%. The Nasdaq Composite turned positive toward the end of the trading session, finishing up 0.1%.
