Stocks, oil plunge on Trump threats of new China tariffs
- President Donald Trump said in a series of tweets on Thursday that, starting Sept. 1, the U.S. will impose a 10% tariff on $300 billion in Chinese goods.
- The Dow went from a gain of 270 points early Thursday to a loss of 180 points moments after Mr. Trump tweeted his threat — a swing of more than 450 points.
- Oil markets plunged almost 8% — the steepest one-day drop in more than four years, Bloomberg News reported.
President Trump is renewing a threat to impose additional tariffs on Chinese imports. Barring a trade deal, starting Sept. 1 the U.S. will apply a 10% tariff on $300 billion in Chinese goods, he tweeted Thursday.
Financial markets, which had jumped in morning trade, fell into negative terrain immediately after Mr. Trump’s tweets. The Dow went from a gain of 270 points Thursday to a loss of 180 points moments after Mr. Trump tweeted his threat — a swing of more than 450 points. It closed the day down 280 points, or 1%, to 26,583. The broader S&P 500 stock index and tech-heavy Nasdaq composite also slid on the tweet.
Oil markets plunged almost 8% — the steepest one-day drop in more than four years, Bloomberg News reported — on worries that a trade war would slow the global economy and drag down demand for energy.
“We thought we had a deal with China three months ago, but sadly, China decided to re-negotiate the deal prior to signing,” the president tweeted to the world just before 2 p.m. Eastern Time, while describing this week’s trade talks with Beijing as “constructive.”
Mr. Trump also said China had reneged on a previous commitment to buy more agricultural products from the U.S. and to halt exports of Chinese-made fentanyl, a potentially lethal opioid, saying that “many Americans continue to die.” He also expressed hopes for a “comprehensive” trade agreement with China.
U.S. and China trade officials ended their most recent negotiations on Wednesday with few signs of progress, while agreeing to reconvene in September. The Trump administration previously imposed a 25% tariff on $250 billion in Chinese imports. But the duties set to take effect Sept. 1 would apply to a broad swath of consumer goods, including clothes, shoes, electronics and other common items.
“Given that these imports are more consumer-oriented, we expect a larger impact on U.S. growth and inflation, compared to previous tariff hikes,” TD Securities analysts said in a research note.
Federal Reserve Chairman Jerome Powell on Wednesday cited concerns about the impact of trade disputes on U.S. growth, especially business confidence, as one reason why the central bank had decided to cut interest rates for the.
“Given that Jerome Powell is concerned about the impact of trade tensions on the global and U.S. economy, I wonder if he’s trying to send a message that the Fed needs to lower even more,” Michelle Casario, an assistant professor of economics at Villanova University, told CBS MoneyWatch.
The Trump administration’s new levies would likely have a greater impact on ordinary Americans than previous tariff rounds, Casario added. That’s because retail goods carry thinner margins than manufactured products, and companies are likely to pass the added costs on to shoppers.
“When you put 10% tariffs on consumer goods, it’s low-income households that are disproportionately affected,” she said. “It’s really regressive. It hurts the people that are the most vulnerable.”
In June, Mr. Trumpat the G20 conference in Osaka, Japan, temporarily easing fears of a full-blown trade war between the world’s two biggest economies. The sides agreed at the time to continue talks in search of a trade deal.
In justifying the White House’s protectionist stance, American trade negotiators say China forces U.S. companies to reveal trade secrets, steals intellectual property and unfairly subsidizes Chinese technology companies.
But a range of key U.S. industries, including tech, retail and transportation companies, warn that a prolonged trade fight with China willand dampen domestic economic growth.
“The president’s decision to proceed with adding these additional costs for hard-working American families is truly shocking,” said Rick Helfenbein, CEO of the American Apparel & Footwear Association, which has lobbied against the tariffs, in a statement. “This decision will increase the tariff bill on all clothes, shoes and home textiles, like blankets and sheets – products that already account for the vast majority of the duties collected by the U.S. government.”\
— Rachel Layne contributed reporting.
Read the full article at: cbsnews.com