Stocks on track for worst May in nearly a decade as Trump threatens tariffs on Mexico

Stocks skidded Friday, with the market on track for its worst May since 2010, after President Donald Trump unexpectedly announced plans to impose tariffs on imports from Mexico in an attempt to pressure the country to stem the flow of migrants across the U.S. border.

Meanwhile, reports said China may be readying fresh retaliatory moves against the U.S. in that trade dispute, while data showed a contraction in Chinese manufacturing activity this month.

How are major benchmarks faring?

The Dow Jones Industrial Average DJIA, -1.11% dropped 240 points, or 1%, to 24,929. The S&P 500 index SPX, -1.10% fell 26 points, or 0.9%, to 2,762 and the Nasdaq Composite COMP, -1.24%  dropped 82 points, or 1.1%, to 7,485.

Read: Stock market on track for ‘key’ monthly reversal that ‘presages deeper declines,’ technician says

What’s driving the market?

Late Thursday, just as Asian markets began trading, Trump announced in a tweet that the U.S. would impose a 5% tariff on all goods from Mexico until that country stops the flow of illegal immigrants into the country. He said the tariffs will rise to 10% on July 1 if the crisis persists, and by another 5% for every successive month, up to 25% by Oct. 1.

“Tariffs will permanently remain at the 25% level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory,” Trump said.

The threat comes as the White House triggered the process for submitting a bill to Congress that would implement the new the U.S.-Mexico-Canada Agreement, the successor to the North American Free Trade Agreement.

Stocks were also battered after a tweet from Hu Xijin, the widely followed editor of the Global Times, indicated that China will hit back hard. “Based on what I know, China will take major retaliative measures against the

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