Markets whipsawed on Tuesday, as investors puzzled through President 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 percent at its low point before recovering some ground and ending the day 0.8 percent lower. Recent waves of selling have left the S&P 500 nearly 10 percent below its mid-February record. Falling more than 10 percent would signify a symbolic milestone known on Wall Street as a correction.

Tuesday’s stock swoon followed Mr. 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…