U.S. stocks dropped less than feared Wednesday after Gary Cohn’s exit as President Trump’s economic adviser signaled the ascendance of a protectionist faction in the White House that could trigger a global trade war.

The Dow Jones industrial average dropped 82.76 points, or 0.3 percent, and closed at 24,801.36. The blue-chip composite earlier in the day had retreated more than 325 points, or 1.3 percent, amid worries that a trade war is brewing after Trump’s announcement last week of a 25 percent tariff on steel imports and a 10 percent tariff on aluminum.

The Standard & Poor’s 500-stock index barely moved, finishing at 2,726.80. The tech-heavy Nasdaq composite eked out a gain of 0.3 percent, finishing the trading day at 7,396.65.

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Stocks got a reprieve in the last hour of trading as news reports indicated that the White House could exempt Canada and Mexico from the tariffs, carving out special treatment for two of America’s biggest trade allies. “There are potential carve-outs for Mexico and Canada based on national security — and possibly other countries as well,” White House press secretary Sarah Huckabee Sanders said.

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The exemptions could temper a potential response from U.S. trading partners across Europe and North America. American businesses and economists have been concerned that tit-for-tat reactions on tariffs could balloon into trade wars that could derail global economic growth.

Wednesday’s swings arrived despite a strong jobs report that showed the U.S. economy continuing to perform at a high level. Companies added 235,000 positions in February, ADP and Moody’s Analytics reported Wednesday morning, far outpacing the 195,000 that Thomson Reuters predicted.

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Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said a trade war could tank the bull market — even with a humming economy.

“The jobs report was better than expected, but it pales in comparison to the importance of whether or not we have a trade war,” Zaccarelli said. “All of the positive economic news and increasing corporate profits are likely to be overshadowed by these policies. And if they are taken to the extreme, and the rest of the world responds in kind in multiple phases with increasingly larger trade barriers, then it will put this bull market at risk.”

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The European Union could ­impose 25 percent levies across a $3.5 billion selection of American homegrown products that include Kentucky bourbon, Levi’s jeans and Harley-Davidson motorcycles. “We have made it clear that a move that hurts the E.U. and puts thousands of European jobs in jeopardy will be met with a firm and proportionate response,” said Cecilia Malmstrom, the European bloc’s official on trade policy.

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Wall Street saw Cohn as the last powerful voice in the Oval Office arguing against tariffs on steel and aluminum and Trump’s threats to break up the North American Free Trade Agreement. His resignation Tuesday is a sign of defeat for the pro-free-trade crowd, which includes many big business leaders, farmers and globalists.

The protectionist faction is led by Commerce Secretary Wilbur Ross and Peter Navarro.

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Some said that it’s still too early to assess the tariffs’ impact.

“The key thing to remember is that the details are scant on the administration’s tariff plans,” said Putri Pascualy, managing director for PAAMCO. “Although tariffs will have some negative downstream impact on select industries, such as automakers and beverage manufacturers, until further details emerge it is difficult to assess the impact.”

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The best hope for investors and business leaders fighting the tariffs is that Republicans in Congress will raise the pressure on Trump to exclude Canada and other key countries from the import taxes. Otherwise, the E.U. and many other trading partners are likely to rapidly hit back with tariffs on U.S. industries.

But there is a lot more coming than just steel and aluminum tariffs. The Trump administration is in the midst of plans to go after China in what is known as a “Section 301” fight in retaliation for the Chinese allegedly stealing U.S. intellectual property related to products including robots and video games.

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