Markets dropped across the world after Trump threatened to impose $200bn more in levies on Chinese goods Business live: trade war fears escalate
US stock markets fell sharply on Tuesday morning, following similar drops across the world, as investors feared that escalating tensions could trigger an international trade war,The Guardian reports.
Donald Trump threatened to impose an additional $200bn in levies on Chinese goods on Monday evening, days after the US announced $50bn in tariffs aimed at punishing what the US administration sees as unfair trade practices. China has already said it will retaliate for last week’s move and said it would escalate its response if further tariffs were imposed.
Monday night’s move sent global stock markets sharply lower and the Dow followed suit when it opened, dropping over 340 points (1.37%) in early trading. The S&P 500 and tech-heavy Nasdaq also fell close to 1%.
Some of the US’s biggest exporters were among those most affected. Boeing dropped 3% and construction and mining equipment maker Caterpillar shed 2.7%. Tech companies, too, felt the pinch with Apple down 1.5%.
US officials will hold a press conference on the decision to impose further tariffs on China this morning. And investors across the world will be hoping for signs that the US will de-escalate the dispute.
The spat between the two economic superpowers is already being felt in China. Chinese stocks recorded their steepest falls since the trade dispute started on Tuesday. The benchmark Shanghai Composite Index dropped 3.8% to 2907.82, its lowest in nearly two years. The yuan fell to its lowest level against the dollar in five months. In Europe, all the major markets fell, with the FTSE down 31 points (0.42%) and Germany’s DAX down over 1%. Oil prices too dipped as investors worried that the dispute would damage economic growth.
China has threatened “qualitative” as well as “quantitative” moves if the dispute worsens, meaning it could use inspections of goods, visa applications and other regulatory measures to make life more difficult for US companies doing business in China.
“Trump appears to be employing a similar tactic he used with North Korea, by blustering first in order to gain an advantage in negotiations,” said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo.
“The problem is, such a tactic is unlikely to work with China.”