Stock Market Plummets As China Slaps New Tariffs In Response to U.S. Threat

U.S. stocks tanked today after China announced its retaliation to the latest round of U.S. tariffs. The S&P 500 and Dow suffered through their worst day of the year so far since Jan 3.

Last week the Trump administration upped tariffs on $200 billion of Chinese goods which is what prompted Beijing’s move to slap tariffs on $60 billion of American goods. Things have been going smoothly the last few weeks, or so at least they had seemed to be going smoothly. Trump has regularly stated that China is amenable to cooperation and we haven’t heard anything “trade war-esque” come out of President Xi’s camp, either.

Increasing tariffs

Snapshot of the tariff war. Source: BBC

Understandably, investors flocked to sell once China formally responded, as many American-made products are shipped overseas will now be forced to ask potential Chinese buyers to fork over an additional 25 percent in order to procure the product, whatever it is. Not only that, but American companies may lose an edge versus non-U.S. competitors since components and raw materials coming out of China are now taxed coming into the United States.

Trump has been threatening tariffs since well over a year ago. However, the administration has delayed implementation and has at least made a display of attempting to accept Chinese trade envoys in order to actually negotiate a way forward in the shape of a new, modern trade deal.

Now things are getting to the point economists and investors alike have long feared – Trump is actually going through with his threats of taxing all of China’s imports. Businesses and consumers alike are going to feel the sting in their pocketbooks and accounts and that’s going to cast a very chilling effect on the greater economy. A company’s quarterly earnings statement might look a bit dimmer and investors are keenly aware of that, hence the mass sell-offs today.

Technology companies were especially hard hit. Semiconductor firms AMD (NASDAQ:AMD), NVIDIA (NASDAQ:NVDA), and Intel (NASDAQ:INTC)all suffered red days. Apple (NASDAQ:AAPL), who is making an all-out push to regain its market share in China suffered a five percent drop.

 

 

 

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