U.S. stocks continued to slide on Tuesday as Donald Trump's tariffs on Canada, Mexico and China went into effect and prompted retaliatory measures, raising investor concerns about the economy.

The Dow Jones Industrial Average fell 520 points, or 1.2%. The S&P 500 fell 1.1%. The Nasdaq Composite fell 1%, pushing the tech-heavy index near correction territory, when an index drops 10% from a recent high.

The U.S. imposed 25% tariffs on Canada and Mexico that took effect at midnight. Trump also imposed additional 10% duties on Chinese goods.

China retaliated with additional duties of up to 15% on some U.S. products. Canadian Prime Minister Justin Trudeau said his country would also impose 25% duties on U.S. goods. Mexican President Claudia Sheinbaum said the U.S.'s southern neighbor would respond with tariffs and other tools to be announced later this week.

Shares of GM and Ford fell 3% and 2%, respectively. Chipotle, which gets about half of its avocados from Mexico, slumped more than 2%.

Tuesday's moves followed a selloff on Monday that dragged the S&P 500 into the red for 2025. As investors hoped a last-minute deal could be reached to avoid full taxes on Mexico and Canada, losses accelerated sharply on Monday after Trump confirmed the long-awaited levies would go into effect soon. Paired with weak economic data released recently, the tariffs have given market participants further reason to worry about the health of the U.S. economy.

"While Tuesday's tariffs are in place, it's still very unclear how long these tariffs will be in place," said Clark Geranen, chief market strategist at CalBay Investments.

"We tend to believe that this is more of a negotiating tactic and not the beginning of a long, drawn-out trade war," he said. "However, in this situation, investors are selling first and asking questions later." (Newsmaker23)

Source: CNBC