The U.S. stock market took a hard hit Monday morning after President Donald Trump announced a 25 percent import tax on Chinese goods. The Dow Jones dropped a total of 340 points, on average 1.3 percent, in response to his announcements.
These latest threats are being felt the hardest in the New York Stock Exchange. One of Trump’s tweets read, “With China we lose 500 Billion Dollars [on trade]. Sorry, we’re not going to be doing that anymore!”
This new decision is a complete turnaround from the president’s attitude just this past April, when he told reporters he was so confident about an “epic” trade deal with China .
The president now believes that the negotiations are not advancing fast enough, and the new tariffs will be applied shortly.
Aside from the NYSE, the Chinese market is also having a hard time. The Shanghai Composite index dropped 5.6 percent, and Shenzhen had its biggest single-day decline since 2016 at 7.4 percent, according to CNBC.
Although Chinese foreign ministry spokesman Geng Shuang said China’s trade team is still “preparing to travel to the United States for consultations,” according to The Wall Street Journal, it’s still uncertain when this will happen.
Some Chinese officials originally scheduled to leave for Washington on May 6 have decided to stay in China and wait for further instructions.
Since the beginning of his presidency, Trump threatened to increase import tariffs on Chinese goods.
Both countries have gone back and forth for over a year now to come up with agreeable trade tariffs.
In April, it seemed like both sides were coming to a final resolution but released only a few details, such as American tariffs on Chinese goods being removed.
When asked what was left to be addressed at the time, Trump said, “I think I can say that some of the toughest things have been agreed to. ”
The United States is looking for a trade deal that will force China to commit to purchasing American goods and open its market for foreign businesses. It’s hard to know what has already been agreed to or if this weekend’s tweets changed that.
The trade war with China has already hurt American businesses, such as the agriculture and manufacturing sectors. These sectors are hoping for a reduction in tariffs.
After the market plummeted on the morning of May 6, Greg Valliere, chief U.S. policy strategist at AGF Investments said, “There’s a risk this tactic could blow up on [President Trump]. I don’t think the Chinese would like to get bullied.”
Despite the upset, there’s still a possibility that the negotiations will continue. After all, this is not the first time Trump has made threats over tariffs.
“There’s still hope that China can stop the additional tariffs,” Xinquan Tu, dean of the China Institute for WTO Studies at the University of International Business and Economics in Beijing said.
Until then, it is uncertain, even to the White House, what the future of trade negotiations with China will be like.
