Stocks sink as Trump trade war with Canada, Mexico escalates

The stock market opened Tuesday with losses after President Trump's steep tariffs on Canadian and Mexican goods went into effect, spurring retaliation from the U.S.'s two top trading partners.

The Dow Jones Industrial Average was down 431 points after the opening bell, losing 1 percent at the start of Tuesday trading. The S&P 500 index was down 0.9 percent and the Nasdaq composite was down 0.7 percent.

Stocked ended Monday with a selloff after Trump told reporters he would go ahead with his twice-delayed 25-percent tariffs on goods from Canada and Mexico. Both countries have pledged to respond with their own import taxes on U.S. goods and other economic penalties that could lead to major price increases for Americans.

The U.S. imports billions of dollars worth of produce, energy, autos, car parts, lumber and other key goods from Canada and Mexico. The economies of all three nations have become deeply integrated in the three decades since the enactment of the North American Free Trade Agreement, which was updated under Trump with the U.S.-Mexico-Canada Agreement (USMCA).

Trump has insisted that steep tariffs are essential for rebalancing the trade relationships between the U.S. and its North American partners, and for stopping the flow of fentanyl and migrants across U.S. borders.

Canadian and Mexican leaders, however, have blasted Trump for derailing a productive economic relationship over concerns they say are exaggerated and unfounded.

Canadian Prime Minister Justin Trudeau announced Monday night his country would impose retaliatory tariffs of 25 percent on $30 billion in U.S. goods. Ontario Premier Rob Ford also threatened Monday to halt energy exports to the U.S. if Trump went ahead with tariffs.

Updated at 9:53 a.m.