The Dow Jones Industrial Average tumbled for a second day as President Donald Trump's tariffs left investors fearful of potential shockwaves for the economy.

The blue-chip average dropped 670.25 points, or 1.6%, building on Monday's plunge of nearly 650 points. The S&P 500 dropped 1.2% after notching its worst day of the year in the prior session. The Nasdaq Composite lost 0.3%.

At their worst levels, the Dow fell more than 840 points and the S&P 500 slid 2%. The Nasdaq had dropped more than 2% at its lowest and at points flirted with correction territory, a term that refers to an index falling 10% from a recent high. Investors scooped up shares like Nvidia that have been battered this year.

Tuesday's drop came after Trump instituted 25% duties on Canada and Mexico that took effect at midnight. He also slapped an additional 10% tariff on Chinese goods. China retaliated with additional tariffs of up to 15% on some U.S. products, while Mexican President Claudia Sheinbaum said the U.S.' southern neighbor would respond with tariffs and other measures that would be announced this weekend.

After Canadian Prime Minister Justin Trudeau said his country would also put a 25% levy on U.S. goods, Trump said in response that he would add even higher tariffs on the country.

Shares of companies with significant imports came under pressure. Shares of GM and Ford dropped more than 4% and 2%, respectively. Chipotle, which sources about half of its avocados from Mexico, slipped 2%. Target shed 3% with its CEO saying prices for some produce would be going higher in the next few days because of the tariffs.

This week's decline pushed the S&P 500 into the red for 2025 and the Dow near flat on the year. Because investors hoped that a last-minute deal could be reached to sidestep the full taxes on Mexico and Canada, losses steepened in Monday's session after Trump confirmed the long-awaited levies were coming.

"I'm calling it a conditional correction," said Sam Stovall, chief investment strategist at CFRA Research. "It's really based on one condition: By how much Trump is going to retain the tariffs."

Paired with soft economic data released recently, the tariffs have given market participants further reason for worry about the health of the U.S. economy. Bank and retail stocks led the way down on Tuesday as investors feared that the levies could lead to another hit on economic growth.

With Tuesday's losses, the S&P 500 now trades below where it finished on Election Day in November, when Trump won his second term in office. Traders will closely monitor Trump's address to Congress on Tuesday night for statements about the tariffs, which were a core pillar of his campaign.