The Dow Jones Industrial Average fell on Tuesday after President Donald Trump imposed additional tariffs on Canadian steel and aluminum entering the U.S.

The 30-stock average fell 565 points, or 1.4%, while the S&P 500 fell 1%. The Nasdaq Composite slipped 0.6%.

In a Truth Social post, Trump said tariffs on steel and aluminum would double to 50% from 25%, effective Wednesday. It was the latest in a series of escalating trade policy moves that have stoked fears of a U.S. economic recession. The White House has already imposed tariffs on Canadian, Mexican and Chinese imports, leading to sharp losses in equities.

On Monday, the Nasdaq had its worst day since September 2022, falling 4%. The 30-stock Dow, which lost nearly 900 points, closed below its 200-day moving average for the first time since Nov. 1, 2023.

The Nasdaq Composite has fallen into correction territory, down more than 10% from a record set in late 2024, while the S&P 500 is trading about 9% below its all-time high set in February.

The declines prompted Citigroup to cut its rating on U.S. stocks to neutral from overweight, citing a "pain in U.S. exceptionalism" as the reason. Adding to the economic concerns was the latest guidance from Delta Air Lines. The company cut its revenue outlook due to weaker U.S. demand, sending shares down more than 8%.

"There's clearly a tolerance for pain on the part of governments in pursuing trade goals that aren't necessarily purely economic," said Ross Mayfield, investment strategist at Baird. "Right now I still think we're not in a recession, but maybe a slowdown or fear of growth. The sell-offs that happen outside of a recession tend to be shorter and less severe than the sell-offs that happen in a recession."

When asked about the possibility of a recession, Trump said in an interview with Fox News that aired Sunday that the economy is going through a "transition period." His remarks came after Treasury Secretary Scott Bessent told CNBC on Friday that there could be a "detox period" for the economy as the Trump administration cuts federal spending.

Investors are eagerly awaiting the release of February's consumer price index and producer price index, due Wednesday and Thursday morning, respectively. Both are important indicators of the health of the U.S. economy.

"It's very important that we don't see a positive surprise on the CPI because at this point, the Fed has a lot of money to step in to cut interest rates and try to boost demand if the economy slows down significantly," Mayfield added. "But they can only do that if they feel like inflation expectations and inflation are well under control." (Newsmaker23)

Source: CNBC