Dow Jones drops as China retaliates with tariffs on US goods
The Dow Jones tumbles 600 points as China retaliates against the US in a trade dispute.
The US-China trade war continues with China retaliating against US tariffs on Chinese-made goods. China will increase taxes on of $60 billion worth of US imports by as much as 25%, worrying investors and causing the Dow Jones to plummet by as much as 700 points.
How is the US-China trade war impacting Wall Street?
The US-China trade impasse will affect many US businesses that trade with China and use the nation’s imported goods. China’s finance ministry released a statement noting that the tariff increase is in response to the US raising tariffs on Chinese imports by 25%.
‘China’s adjustment on additional tariffs is a response to US unilateralism and protectionism. China hopes the US will get back to the right track of bilateral trade and economic consultations and meet with China halfway,’ said the ministry in a statement.
US President, Donald Trump, tweeted about China's President, Xi Jinping, and the US-China trade deal falling through.
‘You[China] had a great deal, almost completed, & you backed out!’ tweeted Trump.
Will the US-China trade war hurt the US economy?
IG analyst, Kyle Rodda, noted that an escalation of tariffs on all goods imported and exported between China and the US would hurt the global economy. According to the Federal Reserve Bank of New York, the current round of tariffs caused US businesses to pass costs totaling $1.4 billion a month on to consumers.
Though there is pessimism about the US-China trade impasse, Neel Kashkari, Minneapolis Fed Chair president, said that the US economy is strong enough to withstand the latest taxes.
‘Relative to China, the US is in a very strong position. Not only is our economy bigger, our economy is much less sensitive to trade. Trade is important to the US economy, but it’s much more important to the Chinese economy, just as a share of its economy,’ said Kashkari.
‘So if there’s a tit-for-tat strategy, and I’m not advocating it, but a tit-for-tat strategy would seem to lean toward the US strength rather than the China strength,’ added Kashkari.
With the US-China trade talks collapsing and tariffs increasing, investors will see how the latest conflict between the two nations will play out.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 30
- The only provider to offer 24-hour pricing
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.