The technology-heavy Nasdaq Composite slid 2.6%, leading declines among the three major indexes. The Dow industrials fell 1.5%, or about 650 points.
The tariffs on Canada and Mexico are slated to start Tuesday. Hours ahead of the deadline, Trump dashed investors’ hopes for a last-minute reprieve, telling reporters that there was “no room left” for negotiations.
New data released Monday morning showed U.S. manufacturers’ supply costs jumped in February, as Trump’s tariff threats raised the specter of higher inflation.
While U.S. markets slumped, European stocks rallied, pushing the pan-continental Stoxx Europe 600, the UK’s FTSE 100 and Germany’s DAX to fresh records.
Some of the biggest gainers were defense stocks, which surged after the region’s leaders talked up military spending. European governments are scrambling to put together a Ukraine-Russia peace plan in the wake of Trump’s rancorous meeting with Ukraine’s president on Friday.
In Monday’s session:
U.S. stock indexes sank. The S&P 500 fell 1.8% on the day. After Monday’s decline, the Nasdaq was down about 9% from its record closing high in December.
Benchmark 10-year Treasury yields fell to 4.178%. On Friday, yields settled at 4.228%, after their steepest one-month decline in more than a year.
The U.S. dollar weakened against the euro and the U.K. pound.
Bitcoin retreated to around $86,000, erasing most of its gains from a Sunday rally prompted by Trump’s comments on creating a U.S. strategic crypto reserve.
European stocks outperformed, helped by defense companies including BAE Systems and Thales, both of which gained more than 14%.
Read the full roundup of the trading day, or listen to WSJ Minute Briefing’s audio summary of the day in markets.
—By Alexander Osipovich and Ed Ballard
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