The Dow Jones Industrial Average plummeted 650 points on Monday as investors prepared for the impending tariffs on Mexico and Canada, set to take effect on Tuesday. The tariffs, announced by President Donald Trump, aim to pressure the two countries into renegotiating the North American Free Trade Agreement (NAFTA).

The market downturn reflects growing concerns among investors about the potential economic impact of the tariffs. The levies are expected to disrupt trade flows and increase costs for businesses, which could lead to higher prices for consumers and reduced economic growth.

The tariffs will target a range of goods, including steel, aluminum, and agricultural products. Canada and Mexico have vowed to retaliate with their own tariffs, sparking fears of a full-blown trade war.

The Dow’s decline was led by companies with significant exposure to international trade, including Boeing, Caterpillar, and 3M. The S&P 500 and Nasdaq also fell sharply, with the S&P 500 dropping 2.5% and the Nasdaq shedding 3.1%.

The market’s reaction to the tariffs is a clear indication that investors are taking the threat of a trade war seriously. As the tariffs take effect, investors will be closely watching for signs of their impact on the economy and the potential for further escalation.

In the short term, the tariffs are likely to lead to higher prices and reduced demand for affected goods. However, the long-term implications are more uncertain, and investors will be looking for clarity on the Trump administration’s trade policy and the potential for a resolution to the NAFTA renegotiations.

As the situation continues to unfold, investors are advised to remain cautious and diversify their portfolios to minimize exposure to trade-related risks. The market’s volatility is likely to persist in the coming days, and investors should be prepared for further fluctuations.