U.S. stocks skidded Thursday after the Trump administration said it is imposing tariffs on steel and aluminum imported from Europe, Canada and Mexico. Canada and Mexico responded with tariffs of their own, and the European Union is expected to follow suit.
American steel makers mostly rose, while industrial companies fell as they face the prospect of paying more for metals they use to make aircraft and machinery. Companies that make household items took some of the worst losses, as products including orange juice and peanut butter might be hit with European tariffs.
Mexico is planning duties on U.S. exports including steel, pork products and sausages, while Canada said it will put reciprocal tariffs on steel and aluminum. The European Union also said it will dispute the U.S. tariffs with the World Trade Organization, which could take years.
Meanwhile the parties will likely keep negotiating, and contentious talks between the U.S. and China are continuing as well. And while experts say a trade war remains a remote possibility, all of those disputes have been weighing on the market for months, and the uncertainty that is creating has real effects.
David Kelly of JPMorgan Funds said the dragged-out process is discouraging businesses from investing because they don't want to build a product only to see it targeted by tariffs.
"You can do great harm to an economy just by leaving people up in the air about what the final deal is going to be," said Kelly, the chief global strategist of JPMorgan Funds. He said the uncertainty is undoing some of the effects of the recent corporate tax cut.
The S&P 500 index lost 18.74 points, or 0.7 percent, to 2,705.27. The Dow Jones industrial average fell 251.94 points, or 1 percent, to 24,415.84.
The Nasdaq composite dipped 20.34 points, or 0.3 percent, to 7,442.12 as technology companies like Alphabet and Facebook bucked the market's decline. The Russell 2000 index, which is made up of smaller companies that tend to do more business in the U.S., slipped 14.38 points, or 0.9 percent, to 1,633.61. It closed at a record high Wednesday.
The U.S. tariffs go into effect Friday. The Trump administration had announced them earlier but delayed their implementation to allow for talks with the EU. U.S. Steel jumped 1.7 percent to $36.87 and Century Aluminum gained 3.4 percent to $17.72. They made larger gains earlier in the day, but slipped after Canada announced reciprocal tariffs on steel and aluminum from the U.S. starting July 1.
Boeing dropped 1.7 percent to $352.16 and Caterpillar fell 2.3 percent to $151.91 while farm equipment maker Deere fell 3.6 percent to $149.51. The tariffs could increase the cost of the metals they use to make their products, and tariffs in Europe or other markets could hurt their sales.
Mexico said it would penalize U.S. imports including flat steel, cheese, fruits, pork bellies and sausage. Dairy maker Dean Foods fell 4.3 percent to $9.57 and Tyson Foods, which makes products including Jimmy Dean sausages, lost 3.9 percent to $67.47.
French officials said the EU will decide exact countermeasures in the coming weeks. European officials have threatened to retaliate against U.S. products including orange juice, peanut butter, clothing, motorcycles and bourbon. Harley-Davidson fell 2.2 percent to $41.08. Hormel, which makes Skippy peanut butter, declined 3.4 percent to $35.89.
GM said SoftBank is taking a 20 percent stake in the GM Cruise automated division. General Motors stock jumped 12.9 percent to $42.70. That was its biggest gain since GM went public again in 2010 after emerging from bankruptcy.
Discount retailers Dollar Tree and Dollar General both stumbled after they said inclement weather hurt their business in the first quarter of the year. Their results fell short of Wall Street projections and Dollar Tree cut its profit forecast for the year.
Dollar Tree fell 14.3 percent to $82.59 and Dollar General gave up 9.4 percent to $87.48.
Deutsche Bank slumped after the Wall Street Journal reported that the Federal Reserve determined the bank's U.S. business is in "troubled condition." The stock lost 4.2 percent to $11.08.
U.S. crude oil slipped 1.7 percent to $67.04 a barrel in New York. Brent crude, used to price international oils, added 0.1 percent to $77.59 per barrel in London.
Wholesale gasoline fell 1.1 percent to $2.16 a gallon. Heating oil lost 1.8 percent to $2.19 a gallon. Natural gas rose 2.3 percent to $2.95 per 1,000 cubic feet.
Bond prices edged higher. The yield on the 10-year Treasury note fell to 2.83 percent from 2.85 percent and financial companies fell.
Gold lost 0.1 percent to $1,300.10 an ounce. Silver fell 0.5 percent to $16.46 an ounce. Copper stayed at $3.07 a pound.
The dollar fell to 108.64 yen from 108.85 yen. The euro rose to $1.1685 from $1.1654.
The DAX in Germany lost 1.4 percent and France's CAC 40 fell 0.5 percent. The British FTSE 100 index dipped 0.1 percent.
Asian stocks rose following big gains in the U.S. the day before. Japan's Nikkei 225 index gained 0.8 percent and Hong Kong's Hang Seng index jumped 1.4 percent. South Korea's Kospi advanced 0.6 percent.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay