U.S. stocks closed sharply lower on Monday, as President Donald Trump reignited global trade war concerns with the announcement of sweeping new tariffs. The S&P 500 fell 0.8%, the Dow Jones Industrial Average dropped 422 points (0.9%), and the Nasdaq Composite slipped 0.9%.

The market sell-off followed Trump’s declaration of a 25% tariff on goods from Japan and South Korea, set to take effect August 1. The move, aimed at addressing what he called “long-standing trade imbalances,” triggered immediate concerns among investors about potential retaliation and further global economic strain.

The U.S. goods trade deficit currently stands at $68.5 billion with Japan and $66 billion with South Korea, according to data from the Office of the U.S. Trade Representative.

Trump warned that if either country responds with retaliatory tariffs, the U.S. would match and increase its own rates accordingly. “Whatever the number is, we’ll match it—and add it to the 25%,” he said.

In addition to Japan and South Korea, Trump announced increased tariffs on imports from several other nations, including Myanmar, Laos, South Africa, Malaysia, and Kazakhstan. The move coincides with the expiration of a temporary halt to his earlier tariff hikes, as trade negotiations with countries like the UK and Vietnam remain in early stages, and a tenuous truce with China holds.

More trade announcements are expected within 48 hours, according to Treasury Secretary Scott Bessent. “It’s going to be a busy couple of days,” Bessent told CNBC. “We’ve seen a flood of new proposals overnight.”

Despite some uncertainty around when the new tariffs will take effect—Trump said letters would be sent to trading partners Monday, while media reports suggest August 1—markets were further rattled by the possibility that rates could rise even higher. Trump has floated potential tariffs of 50%, and even hinted at 60% or 70% in some cases.

Adding to the tension, Trump also announced extra tariffs targeting countries aligned with the BRICS bloc—Brazil, Russia, India, China, and South Africa—accusing them of engaging in “anti-American practices.”

Fed Minutes in Focus

With little economic data released Monday, investors are now looking ahead to Wednesday’s Federal Reserve minutes for further clues on the interest rate outlook. At its June meeting, the Fed kept rates steady at 4.25% to 4.5%, citing uncertainty around the economic impact of Trump’s trade actions.

Tesla Sinks After Musk Launches Political Party

Tesla (NASDAQ: TSLA) shares plunged, shedding $68 billion in market value, after CEO Elon Musk announced he was launching a new political organization called the “America Party.” Investors expressed concern that Musk’s growing political involvement could further distract from Tesla’s operational challenges, including slowing sales and a strategic shift toward autonomous driving.

Analysts at Wedbush called the move “exactly the opposite direction” Tesla shareholders want to see from Musk.

Tensions between Musk and Trump have escalated in recent weeks, particularly over the newly-passed “Big Beautiful Bill,” which Musk has publicly criticized.

Other Movers

• KalVista Pharmaceuticals (NASDAQ: KALV) surged after the FDA approved its new on-demand oral treatment for hereditary angioedema, a rare swelling disorder.
• Geo Group (NYSE: GEO) and CoreCivic (NYSE: CXW) gained following passage of Trump’s new tax-and-spending bill, which boosts funding for immigration detention centers.
• Stellantis (NYSE: STLA) declined as the National Highway Traffic Safety Administration opened a recall investigation involving 1.2 million Ram trucks over potential transmission issues.

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