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By Gabe Whisnant and Sonam Sheth
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Wall Street went on a roller coaster Monday, with markets plunging earlier in the day and then recovering some of those losses as investors brace for President Donald Trump's tariffs.
The Context
Trump pledged during his 2024 campaign that he would impose steep tariffs on friends and foes alike, sparking immediate criticism from economists and financial analysts who said U.S. consumers would likely bear the brunt of the cost.
Read More on U.S.
The president acknowledged that as well, saying Sunday that Americans could feel "some pain" associated with tariffs but insisting it would "all be worth the price that must be paid."
What To Know
By the time markets closed on Monday afternoon, the S&P 500 was down by 0.78 percent amid more substantial losses in Asia and Europe. The Dow Jones Industrial Average was down 0.28 percent and the Nasdaq composite dropped by 1.2 percent.
Earlier in the day, it seemed like U.S. stocks would incur even steeper losses as companies prepared for the impact of Trump's newly announced tariffs on imports from Canada, Mexico and—to a lesser extent—China. The S&P 500 was briefly down nearly 2 percent earlier Monday and the Dow plunged 665 points.
But markets recovered some of those losses after Mexican President Claudia Sheinbaum announced that she and Trump had spoken and the U.S. had agreed to hold off on imposing tariffs for one month in exchange for Mexico sending 10,000 troops to the border.
It's not the first time Mexico has deployed troops to its border with the U.S. It sent 15,000 troops to the border in 2019 in response to pressure from the Trump administration, and it sent 10,000 troops to the border in 2021 under the Biden administration.
Trump also spoke to Canadian Prime Minister Justin Trudeau Monday afternoon and Trudeau announced the U.S. had agreed to hold off on imposing tariffs on Canada for one month while the countries work together.
"I just had a good call with President Trump," Trudeau wrote on X, formerly Twitter. "Canada is implementing our $1.3 billion border plan — reinforcing the border with new choppers, technology and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl. Nearly 10,000 frontline personnel are and will be working on protecting the border."
Trudeau said Canada would also appoint a "Fentanyl Czar" and work with the U.S. on combatting organized crime, fentanyl and money laundering.
In exchange, "proposed tariffs will be paused for at least 30 days while we work together," Trudeau said.
Trump's call with the Canadian leader came after Trudeau announced over the weekend that if the U.S. imposed tariffs on Candian goods, Canada would respond accordingly with tariffs aimed at hurting Republican-controlled states.
Trump doubled down on his criticism of Canada following Trudeau's announcement, writing on Truth Social, "Canada doesn't even allow U.S. Banks to open or do business there. What's that all about?"
"Many such things, but it's also a DRUG WAR, and hundreds of thousands of people have died in the U.S. from drugs pouring through the Borders of Mexico and Canada. Just spoke to Justin Trudeau. Will be speaking to him again at 3:00 P.M," Trump wrote earlier Monday, before their call.
What People Are Saying
Sheinbaum detailed her call with Trump, writing in Spanish on X: "We had a good conversation with President Trump, with mutual respect for our relationship and sovereignty. We reached a series of agreements."
Trump confirmed his conversation with Sheinbaum, writing on Truth Social: "It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States. These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country."
"We further agreed to immediately pause the anticipated tariffs for a one month period during which we will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico," he continued. "I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a 'deal' between our two Countries."
China's foreign ministry issued a statement regarding Trump's tariffs on Sunday, saying: "China calls on the United States to correct its wrongdoings, maintain the hard-won positive dynamics in the counternarcotics cooperation, and promote a steady, sound and sustainable development of China-U.S. relationship."
What Happens Next
Trump shared an update on his call with Trudeau Monday afternoon after this story was published, telling CNN's Kaitlan Collins it went "very well."
When Collins asked Trump if the tariffs against Canada will still go into effect at midnight, the president replied, "Watch."
Shortly after, Trudeau announced on X that the tariffs had been paused.
Trump confirmed the details of their conversation, writing on Truth Social: "Canada has agreed to ensure we have a secure Northern Border, and to finally end the deadly scourge of drugs like Fentanyl that have been pouring into our Country, killing hundreds of thousands of Americans, while destroying their families and communities all across our Country."
He added: "I am very pleased with this initial outcome, and the Tariffs announced on Saturday will be paused for a 30 day period to see whether or not a final Economic deal with Canada can be structured. FAIRNESS FOR ALL!"
Update 2/3/25 4:40 p.m. ET: This story has been updated with additional information.
Update 2/3/25 4:49 p.m. ET: This story has been updated with additional information.
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