*

Ford and General Motors ( GM ) fall

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Target ( TGT ) drops on bleak FY forecast

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Walgreens jumps on reports on take-private deal

(Updates to US close)

By Chibuike Oguh, Johann M Cherian and Sukriti Gupta

NEW YORK, March 4 (Reuters) -

The benchmark S&P 500 and Dow finished lower on Tuesday as

trade tensions escalated following U.S. President Donald Trump's

new tariffs on Canada, Mexico and China.

The 25% tariffs on imports from Mexico and Canada, along

with doubled duties on Chinese goods, took effect on Tuesday.

China

and

Canada

retaliated while Mexican President Claudia Sheinbaum

vowed

to respond likewise, without giving details.

"Equity valuations have been very elevated and there's been

yellow flags all over the horizon given moves to cut government

spending," said Ben McMillan, chief investment officer at IDX

Insights in Tampa, Florida. "Now on top of that, we have all

this rhetoric around tariffs."

Citigroup ( C/PN ) and JPMorgan Chase & Co ( JPM ) fell,

sending the bigger banks index lower.

The CBOE market volatility index rose 0.70% to its

highest since December 20.

"The fear here is that it's going to slow (economic)

growth," said Adam Sarhan, CEO of 50 Park Investments in New

York. "And when you have a slowdown in economic conditions, it's

a situation where banks specifically make less money because

fewer goods and services are traveling through the economy."

According to preliminary data, the S&P 500 lost 71.04

points, or 1.21%, to end at 5,778.68 points, while the Nasdaq

Composite lost 67.12 points, or 0.37%, to 18,283.07. The

Dow Jones Industrial Average fell 673.34 points, or

1.56%, to 42,517.90.

Car makers Ford and General Motors ( GM ), which have

vast supply chains across North America, fell. The domestically

focused Russell 2000 index dropped.

Wall Street is really concerned, McMillan said. "The

likelihood of tariffs will lead to higher prices and therefore

lower spending."

Target ( TGT ) fell after the retailer forecast full-year

comparable sales below estimates.

Best Buy ( BBY ) slumped after the electronics retailer

issued a downbeat forecast, while Walgreens jumped as a

report hinted that the pharmacy chain is closing in on a

take-private deal by Sycamore Partners.