Stocks tumble as new Trump tariff threat spooks investors
Stock markets tumbled on Tuesday after U.S. President Donald Trump escalated a dispute with Beijing over technology policy by threatening a tariff hike on an additional $200 billion of Chinese goods.
Amid plunges across global markets, Wall Street looked poised for losses, with the future for the Dow Jones industrial average off 1.6 percent and that for the Standard & Poor’s 500 index off 1.3 percent.
On Monday, President Trump directed the U.S. Trade Representative to prepare new tariffs on $200 billion in Chinese imports as the two nations moved closer to a potential trade war. The tariffs, which Mr. Trump wants set at a 10 percent rate, would be the latest round of punitive measures in an escalating dispute over the large trade imbalance between the two countries.
Mr. Trump recently ordered tariffs on $50 billion in Chinese goods in retaliation for intellectual property theft. The tariffs were quickly matched by China on U.S. exports, a move that drew the president’s ire.
“Most observers outside the Trump administration think that a trade war between the U.S. and China will lead to losses on all sides,” Oxford Economics analysts wrote in a Tuesday report about the threat of an additional round of tariffs. “With the Trump team apparently of the view that the U.S. can win trade wars, and China determined to fight one if it ensues, it increasingly looks like we cannot preclude a full-blown trade war between the world’s two largest economies.”
Mr. Trump accused Beijing of being unwilling to resolve the dispute over complaints it steals or pressures foreign companies to hand over technology. China’s Commerce Ministry criticized the White House action as blackmail and said Beijing was ready to retaliate.
In early trading, Germany’s DAX plunged 1.8 percent to 12,606.14 and France’s CAC 40 fell 1.4 percent to 5,372.20. London’s FTSE 100 lost 0.8 percent to 7,565.81. On Monday, the DAX retreated 1.4 percent and the CAC 40 shed 0.9 percent while the FTSE 100 lost less than 0.1 percent.
“President Donald Trump’s unwillingness to back down became apparent this morning, once again sinking markets into a risk-off atmosphere,” Jingyi Pan of IG said in a report. Pan said market attention turned to China for “signs of further retaliation.”
The Shanghai Composite Index fell 3.8 percent to 2,907.82 and Hong Kong’s Hang Seng lost 2.8 percent to 29,468.15. Tokyo’s Nikkei 225 retreated 1.8 percent to 22,278.48 and Seoul’s Kospi gave up 1.5 percent to 2,340.11. India’s Sensex shed 0.6 percent to 35,331.28 and Sydney’s S&P-ASX 200 declined 0.6 percent to 6,102.10. Benchmarks in Taiwan, New Zealand and Southeast Asia all declined.
On Monday, U.S. stocks finished mixed in trading that ended before Trump issued his tariff threat. Household goods companies took some of the worst losses as the S&P 500 fell for the third time in four days. The S&P 500 fell 0.2 percent, while the Dow lost 0.4 percent. The Russell 2000 index of small-cap stocks rose 0.5 percent. Many investors feel smaller and more U.S.-focused companies are less vulnerable in the event of a major trade dispute.
Benchmark U.S. crude lost 88 cents to $64.97 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 79 cents on Monday to $65.85. Brent crude, used to price international oils, fell 55 cents to $74.79 per barrel in London. The contract rose $1.90 the previous session to $75.34.
The dollar declined to 109.75 yen from Monday’s 110.54 yen. The euro edged down to $1.1552 from $1.1623.
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