Why is the Stock Market Falling? Mexico, China, & Canada Tariffs

Why Market is Falling? 

Based on mixed signals from around the world, benchmark stock indices BSE Sensex and Nifty50 opened lower and with losses on Friday, 28 Feb 2025. 

The Nifty Auto index opened more than 2% lower, despite 1-2% falls in the Nifty Bank, Metal, Pharma, Consumer Durables, and Oil & Gas indexes while the BSE Sensex was trading at 74,092.73, down by 0.70%, while the Nifty 50 was trading at 22,374 down by 0.76%. 

Key Reasons for Stock Market Falling Today

1. Trump Tariffs 

President Donald Trump stated on Thursday that he will implement tariffs of 25% on goods from Mexico and Canada effective from 4 March. He has also recently proposed imposing an additional 10% tariff on Chinese imports on the same date.

America’s top three trading partners are Mexico, China, and Canada. The simultaneous tariffs on all three nations could lead to rampant price hikes for American consumers when inflation is already on the rise.

(Source: CNN)

2. F&O Rollovers & March Series

In terms of rollovers, Nifty futures rollovers stood at 84% versus 79% in the last three series. Nifty futures will commence the March series with a lower open interest base of Rs 39,800 crore as compared to OI of Rs.42,100 crore at the beginning of the February series.

The market wide futures open interest for the beginning of the March series was Rs.4.365 lakh crore versus Rs.4.64 lac crore for the February series. Market-wide rollovers came in at 90%, which is more than the three-month average, which was at 89%.

3. Disappointing U.S Data

The most recent economic developments concerning the United States have only served to augment the pessimistic outlook that consumers have adopted towards the market. The US economic data for the fourth quarter indicate a further contraction and the deceleration remains intact against the backdrop of worries that tariffs will dampen consumption spending due to inflationary pricing. 

U.S Q4 real GDP growth came in at 2.3%. In addition, US weekly jobless claims have surged, registering the largest gain posted in the last 5 months, which suggests the unemployment rate is increasing.

Detailed Video

Tariff in US

Industrial tariffs are charges that apply to non-agricultural imports and are applied as a percentage of ad valorem, or calculated per unit with a set specific value, for instance, $1 per 100 pounds. 

Nearly 94% (by value) of U.S. merchandise imports are industrial (non-agricultural) goods. Average trade-weighted tariffs on U.S. imports of industrial goods are currently 2%. 50% of all industrial goods imports are exempt from import duties.

Canada Tariffs

Having backed out from the schemes set earlier in the month, Trump has again claimed to impose a 25% flat tariff on Canada. As Trump confirmed on Thursday, new borders for March 4 have been set.

Conclusion

The Stock Market's decline today can be attributed to Trump's tariffs on Mexico, Canada, and China, which raised fears over inflation and trade conflict. Market rollover and lacking economic performance in the US also contributed to the negative outlook. Investors are fearful over surging prices and economic decline. Variance and uncertainty are at an elevated state resulting in alert market activity.

Disclaimer: No buy or sell recommendation is given. No investment or trading advice is given. This blog contains information from various sources taken from different internet sources available in the public domain. Always consult with an eligible financial advisor before investing.