“Tariffs” may be the most beautiful word in the dictionary for U.S. President Donald Trump, but it is one that stokes fear in investors. Risk-on assets such as stocks and cryptocurrency sank Monday after Trump refused to pardon Canada and Mexico from a hefty 25% duty on all goods imported from both countries.

In the markets, the S&P 500 fell the most since Dec. 18 and is testing its 200-day moving average, generally seen as a support level — meaning that if the index dips below that line, it could fall even further. Bitcoin sank below $90,000, erasing in a flash its 10% gain from Trump’s announcement on Sunday of the creation of a U.S. strategic crypto reserve.

Across the Atlantic, however, European leaders playing defense against Trump’s overtures seem to be boosting the continent’s markets. The regional Stoxx 600 outperformed the S&P 500 for February. And with defense stocks rising, Stoxx 600 had another leg-up on Monday.

Still, as Trump’s tariff announcement came after European markets closed, they could react badly on Tuesday when the tariffs go into effect officially. Investors should brace themselves for more potential volatility.

What you need to know today

Trump: Tariffs on Canada, Mexico to proceed

U.S. President Donald Trump said the 25% tariffs on Canada and Mexico will be implemented on Tuesday after a monthslong pause, appearing unsatisfied by both countries’ efforts to fortify their borders. There was “no room left for Mexico or for Canada” to negotiate, Trump said at a White House event Monday, confirming that they “go into effect tomorrow.” An additional 10% tariff on China — on top of the 10% already imposed in February — will also kick in.

S&P now in the red in 2025

On Monday, the S&P 500 fell 1.76%, its worst day since December, and is now in the red in 2025. The Dow Jones Industrial Average lost 1.48% and the Nasdaq Composite tumbled 2.64%. Bitcoin slumped 12% to around $82,000 as of early Asia trading. The pan-European Stoxx 600 index climbed 1.07%, bolstered by defense stocks surging after regional leaders held security talks on Sunday. European Commission President Ursula von der Leyen has said she will reveal more details on the “rearm Europe plan” Tuesday.

Arrests over Nvidia chips

Singapore authorities detained three people late last week on charges of deliberately misrepresenting the final destination of U.S.-manufactured servers, likely containing Nvidia’s highly sought-after chips, said the country’s Home Affairs and Law Minister K Shanmugam on Monday. The detainment suggests the operation of a sophisticated network of resellers, possibly channeling Nvidia chips to China. Shares of Nvidia sank 8.7% Monday.

TSMC’s $100 billion investment in U.S.

Taiwan Semiconductor Manufacturing will invest $100 billion in the U.S. to build five new fabrication facilities in Arizona, Trump announced Monday, calling the investment a “tremendous move by the most powerful company in the world.” The new capital brings TSMC’s total investment in the U.S. to $165 billion. Trump has repeatedly called out and accused Taiwan of stealing the U.S. chip manufacturing business.

Euro zone inflation eases

Euro zone inflation eased to 2.4% in February, according to flash data from Eurostat on Monday. While the headline figure dropped from January’s 2.5%. it’s higher than the 2.3% expected by a Reuters poll. Core inflation, which strips out energy, food, alcohol and tobacco costs, was 2.6% in February, slightly lower than the previous month. The European Central Bank is widely expected to announce another interest cut on Thursday.

[PRO] Worries over 200-day moving average

Technical analysts who watch price charts worry that the S&P 500 could soon test its 200-day moving average. The broad-based index’s beating on Monday confirmed how fragile the market setup is at the start of a new month, analysts said. Here’s why that technical level matters to investors.

And finally…

The Canary Wharf business district in London.

Dan Kitwood | Getty Images News | Getty Images

The rampant growth of private credit may have an unlikely beneficiary: banks

A relatively new and growing form of lending in Europe is enabling banks to reduce costs, get around provisioning requirements and potentially boost returns by classifying certain debts as lower risk than they otherwise would. The new financing structure, known as “back leverage,” involves borrowers securing a loan from a private credit fund, which in turn borrows from a bank.

The loan amount issued by the bank to the credit fund is rated as less risky than an equivalent loan issued directly to the borrower, according to nearly a dozen sources CNBC interviewed for this story. The lower-risk-rated debt means banks are required to set aside a smaller amount of regulatory capital, relative to debt that is classified at a higher risk.