U.S. stocks continued to decline on Tuesday following President Donald Trump’s announcement of increased tariffs on steel and aluminum imports from Canada. The US stock market saw major drops, with the Dow Jones Industrial Average falling by over 500 points, or about 1.2%, and the Nasdaq Composite and S&P 500 dropping by 0.8% and 1%, respectively.

In a Truth Social post, Trump revealed that the U.S. will impose an additional 25% tariff on steel and aluminum from Canada, raising the total tariff to 50%. The new tariffs are set to take effect on March 12. Trump also threatened to increase tariffs on autos entering the U.S. from Canada on April 2 unless Canada eliminates certain long-standing tariffs.

These developments followed a significant sell-off in the previous session, driven by concerns over the potential impact of Trump’s tariffs on economic growth, which unsettled investors. On Monday, the Dow plunged by 890 points, or 2.08%, while the Nasdaq and S&P 500 fell by 4% and 2.69%, respectively. Both the Dow and S&P 500 experienced their worst days since December 18, and the Nasdaq had its worst day since September 2022.

Trump, during a Sunday interview, suggested that the U.S. economy could undergo a “period of transition” as his policies take effect but stopped short of predicting a recession. “Bringing wealth back to America is a big thing, but it takes time,” he said, suggesting the country will eventually see positive results.

Financial markets have faced increased volatility in recent weeks, as rising trade tensions and signs of slowing U.S. economic growth have affected consumer confidence and business activity. Investors are especially concerned about the uncertainty surrounding trade policies, particularly Trump’s shifting stance on tariffs, which has created challenges for businesses, consumers, and investors.

Many market analysts believe that the current environment, with rising trade tensions and concerns over a potential recession, could lead to a market correction. “A combination of trade war fears, geopolitical tensions, and an uncertain economic outlook might be the catalyst for a downturn,” said Dan Coatsworth, an investment analyst at AJ Bell.

Tech stocks were hit hardest in the recent sell-off, with Tesla shares dropping by more than 15% on Monday. Year-to-date, Tesla’s stock is down 41.4%, including a 36.6% drop over the past month. Tesla’s market value has fallen sharply from its peak of $1.5 trillion in December to around $696 billion as of March 10.

UBS downgraded its forecast for Tesla’s first-quarter deliveries, contributing to the stock’s decline, along with broader concerns about the U.S. economy. “The uncertainty surrounding tariffs is causing this market turmoil,” said Art Hogan, chief market strategist at B Riley Wealth. “Technology stocks are especially affected, as they are more sensitive to shifts in risk sentiment.”

Other major tech stocks, including Apple, Microsoft, Alphabet, Amazon, Nvidia, and Meta Platforms, also saw losses between 2.4% and 5.1% on Monday.