The Dow plunges 700 points because now Trump’s trade war is real

U.S. stocks plummeted again on Tuesday, with the Dow Jones Industrial Average dropping up to 700 points as President Donald Trump’s newly imposed 25% tariffs on goods from Canada, Mexico, and China prompted retaliatory measures from some of the affected countries.

China imposed additional duties of up to 15% on certain U.S. products. Ottawa retaliated with 25% tariffs on $30 billion worth of U.S. goods starting Tuesday, rising to cover $125 billion of merchandise in 21 days. Canada’s provinces are taking their own actions, and irate citizens are boycotting U.S. products.

At about 12:35 p.m., in New York, the Nasdaq Composite dropped 0.6%, while the Dow Jones Industrial Average shed 578 points or 1.3%. The S&P 500, which had its worst day of the year on Monday, dropped 1%.

Tesla stock drops following a downgrade

Tesla (TSLA-4.51%) stock declined more than 4.5% due to rising fears about tariffs among investors — car prices may be driven higher by the duties. The company also has a large presence in China, including a major assembly plant, and so may be vulnerable to retaliation by Beijing.

Additionally, Bank of America (BAC-5.78%) reduced its price target for the stock to $380 from $490 while maintaining a Neutral rating. Morgan Stanley analyst Adam Jonas yesterday had designated Tesla stock as a “Top Pick” in the U.S. automotive sector and raised his price target to $430.

Target and Best Buy CEOs fear tariffs will raise prices

Target’s (TGT-4.11%) stock fell 4.5% after it said it expects a “meaningful” year-on-year decline in first-quarter profits compared and CEO Brian Cornell warned that the new tariffs may prompt the retailer to increase prices as soon as next week. The company’s fourth-quarter earnings beat Wall Street’s expectations.

Best Buy (BBY-14.02%) stock dropped 12% after company executives warned that the duties could increase the prices of goods it sells and could reduce its comparable sales if they stay in place for a full year. The electronics retailer reported fourth-quarter results that exceeded Wall Street’s expectations.

Chipotle depends on Mexican avocados

Chipotle (CMG-2.54%) shares declined due to concerns about the restaurant chain’s dependence on avocados that are 50% sourced from Mexico. The company has said its diverse supply chain could help it withstand the tariffs.

— Francisco Velasquez and Josh Fellman contributed to this article.