Dow plunges 300 points as Trump slaps fresh tariffs on Chinese goods

Tariff talk is once again spooking Wall Street.

The Dow Jones industrial average swung more than 600 points Thursday — plunging in the afternoon following an early, 335.29-point surge — after President Trump tweeted that he would slap a new round of tariffs on $300 billion worth of Chinese goods next month.

Trump lamented that although recent talks with China were “constructive,” China tried to renegotiate terms of a pending deal and has so far failed to buy up large amounts of US agricultural products and halt the sale of fentanyl to the US.

“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.

“Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States — this never happened, and many Americans continue to die!” Trump wrote.

Renewed tensions sent stocks tumbling, with major indices swiftly turning red moments after Trump’s tweets. The S&P 500 and Nasdaq were down 0.9 percent and 0.8 percent, respectively while the Dow shed 280.85 points — or 1.1 percent — to close at 26,583.42.

While previous tariff rounds were felt more directly at the business level, this round would be felt in consumers’ pockets.

“The imposition of additional 10 percent tariffs on the remaining $300 billion imports from China would result in US consumers paying higher prices for everyday items such as electronics, clothing, footwear and toys,” Elena Duggar, associate managing director at Moody’s Investors Service, said Thursday.

Stocks tied to big retailers plunged in afternoon trades with shares of Macy’s, Kohl’s and Gap ending the day down more than 7 percent.

“We all agree China is a bad actor, but an unprecedented tax hike on hardworking Americans is not the answer,” said Jonathan Gold, spokesman for Tariffs Hurt the Heartland.

Meanwhile, oil prices plunged 7 percent — the sharpest drop since February 2015 — as traders panicked over weaker global growth. Shares of Exxon Mobil and Chevron tumbled 2.6 percent and 1.9 percent, respectively.

But Trump showed little sign of giving in even with US markets plunging.

“Until such time as there is a deal, we’ll be taxing them,” Trump told reporters Thursday.

Thursday’s selloff followed a brutal trading day Wednesday after the Federal Reserve cut interest rates by a quarter-point but hinted that the cut was an adjustment and not part of a “lengthy cutting cycle.”

Trump slammed Fed Chair Jerome Powell Wednesday for not delivering the steeper cut he has demanded for months.

“As usual, Powell let us down,” Trump tweeted Wednesday.

Markets shook off Wednesday’s losses in early trades Thursday after the Institute for Supply Management revealed that the manufacturing index fell to 51.2, marking the fourth consecutive month of slowing growth. Readings above 50 mean activity is expanding while readings below 50 indicate contraction.

It was the type of bad news that bodes well for markets because it implies the Fed while have to continue rate cuts to continue the economic expansion.

But tariffs uncertainty adds a “fear factor” in the economy that can’t be solved solely by lower rates because businesses and consumers both pull back spending, Peter Cardillo, chief market economist at Spartan Capital Securities, added.

“Higher tariffs represent an economic headwind that my be offset, but not reversed with monetary stimulus,” Jack Ablin, chief investment officer at Cresset Capital Management, told The Post.

“You can have low rates and wind up with a flat economy,” Cardillo said.

Source: https://nypost.com/2019/08/01/dow-plunges-300-points-as-trump-slaps-fresh-tariffs-on-chinese-goods/