Dow Jones down 200 points after US-China trade impasse

Wall Street is volatile after US President Donald Trump threatens China with more tariffs.

Donald Trump and Xi Jinping after US China trade deal Source: Bloomberg

Wall Street is reeling after the latest US-China trade talks negotiations fell through. The Dow Jones is falling after US President, Donald Trump, threatened to impose more tariffs on Chinese imports.

Why is Trump threatening tariffs on China?

Trump recently tweeted about raising tariffs on China on Sunday in the midst of the latest trade negotiations between the two nations.

‘The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No! The 10% will go up to 25% on Friday. 325 Billions Dollars....of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%,’ tweeted Trump.

Trump sent that tweet after US trade representaive Robert Lighthizer, told him that China was considering withdrawing from the trade summit that was supposed to occur this week.

The Dow Jones was rallying until the Trump tweet. Though some of the losses were erased, investors are still nervous about the status of the trade negotiations between the US and China. Michael Hirson, head of China and Northeast Asia at the Eurasia group, wrote that Trump’s tweets could hinder any future trade talks.

‘His move injects major uncertainty into negotiations, which now face a rising risk of an extended impasse — perhaps even through the US presidential election,’ wrote Hirson.

What’s next for the Dow Jones and the US-China trade agreement?

Jones Investing analyst Michael O’Rourke, wrote in a note to clients that investors have to determine the intent of Trump’s tweet and how long it could impact the US stock market and US-China trade relations.

‘The challenge for investors is deciphering whether this another bluff by the president, an attempt to lower expectations in order to provide an upside surprise or actually a potential breakdown of the trade negotiations and an escalation of the trade war,’ said O’Rourke.


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