Markets whipsawed today, as investors puzzled through President Donald Trump’s commitment to tariffs, with stocks dropping in early trading before recovering late in the day.

The S&P 500 index fell 1.5% at its low point before recovering some ground and ending the day 0.8% lower. Recent waves of selling have left the S&P 500 nearly 10% below its mid-February record. Falling more than 10% would signify a symbolic milestone known on Wall Street as a correction.

Today’s stock swoon followed Trump’s new threats of steep tariffs against Canada, with markets moderating hours later after a Canadian official said a delegation would head to Washington soon to lower the tension between the two countries.

The tech-heavy Nasdaq Composite index wavered between gains and losses, closing 0.2% lower after a 4% drop Monday. The Nasdaq is already in correction. The Dow Jones Industrial Average fell 478 points, or 1.14%, to 41,433.

Investors are struggling to understand the administration’s messaging on tariffs. Having previously thought Trump’s more extreme tariff threats were mostly a negotiating tool, investors are starting to worry that they may have been too blase about the risks inherent in his strategy.

“Over the coming weeks, we expect further volatility and potential weakness in equity markets,” analysts at the Swiss bank UBS noted today.

Today, Trump said he would double the planned tariff on steel and aluminum imported from Canada, to 50%, set to go into effect Wednesday. He also said that if Canada did not lower its levies on trade with the United States, he would set tariffs on cars from Canada so high that they would “permanently shut down” the Canadian car industry.

The shares of Ford Motor and Stellantis both fell. General Motors’ share price recovered late in the day to trade slightly higher.

Later in the day, Doug Ford, Ontario’s premier, said that Commerce Secretary Howard Lutnick had extended “an olive branch” to Canada, and that a Canadian delegation would head to Washington within the next day or two.

Mounting fears about the impact on economic growth appear to outweigh worries that tariffs could reignite inflation, reflected in falling government bond yields. Investors are also contending with the possibility of a government shutdown this week and additional tariffs put in place next month.

UBS joined others in raising the odds of a severe economic downturn later this year, but it noted that this was still not its expected outcome. “Our base case remains that the Trump administration’s aggressive stance on trade will weigh on growth, but not so much as to drive the U.S. into recession,” the UBS analysts said.

Airline stocks also wobbled today after Delta Air Lines and American Airlines issued warnings about a worsening economy. Delta said late Monday that it had cut its profit forecast for the first three months of the year, saying that rising concern among consumers was denting demand for air travel. American echoed those concerns early today, noting that “softness in the domestic leisure segment” would result in a bigger loss this quarter than previously expected.

Delta’s shares fell more than 7%, while American’s dropped more than 8%. Airlines in Europe, like Germany’s Lufthansa and the parent of British Airways, and in Asia, like Korean Air, also posted declines.

Investors have become increasingly cautious in recent weeks as Trump has flip-flopped on tariffs, causing confusion and uncertainty.

Trump downplayed concerns over the jittery stock market today, telling reporters in the afternoon that “markets are going to go up and they’re going to go down, but, you know what, we have to rebuild our country.”

The comments were a sharp shift from the president’s first term, when he consistently pointed to the stock market as a barometer of his success, and through Joe Biden’s presidency, when Trump cherry-picked stock market moves to criticize his rival.

While current economic data has remained robust, surveys of consumers, business leaders and economists are growing pessimistic. Analysts at JPMorgan Chase now say there is a 40% chance for a global recession.

“The focus will remain on the broader economic concern that spurred yesterday’s huge risk-off trade,” John Canavan, the lead U.S. analyst at Oxford Economics, said in a note today.

Analysts pointed to Trump’s refusal to rule out a recession in an interview broadcast Sunday, when he stated that the economy was undergoing “a period of transition.” The Trump administration has offered little to assuage investors’ fears, continuing to drive a hard line on tariffs on the major U.S. trading partners Canada, Mexico and China.

In a research note today, Takahide Kiuchi, executive economist at Nomura Research Institute, said financial markets had been caught off guard by Trump’s “unwavering” commitment to push ahead with tariffs despite the economic pain that it might cause.

“Even if the tariffs lead to inflation and economic deterioration, President Trump is likely to place the blame squarely on former President Biden rather than acknowledge any shortcomings in his own economic policies,” Kiuchi wrote.

In a recent note, Goldman Sachs said the stocks making up the main equity indexes in Taiwan, South Korea and Japan would be the most exposed in Asia if the Trump administration imposed a universal tariff on trading partners.

Technology shares declined in Japan today, with Sony, SoftBank, Hitachi and Fujitsu each falling more than 2%. Chip giant Taiwan Semiconductor Manufacturing Corp. and Apple supplier Foxconn were both down more than 2%.

Shares of Japanese automaker Toyota Motor fell nearly 3%, while South Korean automaker Hyundai Motor dipped slightly. Japanese and South Korean automakers are expected to be particularly damaged by a potential 25% tariff on foreign cars that Trump has indicated could take effect as soon as April 2.

Bruce Pang, an adjunct associate professor at the Chinese University of Hong Kong business school, said Chinese markets were moving out of step with the United States and other global counterparts. Chinese shares are getting a lift from the government’s ambitious target of around 5% growth and recent business-friendly comments about supporting the private sector and entrepreneurship from top leaders.

“These factors collectively help mitigate the headwinds arising from the Trump administration’s news flows,” he said.

In the year to date, shares of Chinese companies listed on the Hong Kong Stock Exchange have risen about 20%, compared with a 4% slide on the S&P 500.

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This article originally appeared in The New York Times.

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