President Donald Trump announced the U.S. will levy some $200 billion in new tariffs on Chinese imports Monday, sending the stock market into a tizzy Tuesday morning and further escalating fears that the two largest economies in the world will enter a trade war.
“I directed the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent,” Trump said in a statement Monday evening. (RELATED: Trump Threatens China With $200 Billion In New Tariffs)
The stock market reacted immediately to the threats Tuesday morning, with every major U.S. index falling precipitously after the opening bell. The Dow Jones Industrial Average fell well over 400 points. The NASDAQ and S&P 500 fell over 100 and 30 points, respectively. Chinese markets took a significant dive, reaching their lowest levels in roughly 24 months.
Monday’s announcement is in addition to the 25 percent tariffs the administration enacted on $50 billion worth of goods that “contain industrially significant technologies,” a move that the U.S. hopes will help stop intellectual property theft on the part of Chinese manufacturers.
The markets have been rather resilient to the ongoing threats and posturing on the part of the U.S. and China. Tuesday is one of the first signs for investors, who have until now somewhat undervalued the possibility that China would retaliate in any significant way, have underestimated a trade war. (RELATED: China Lashes Out At ‘Global Economic Disruptor’ Trump As Trade War Escalates)
China has responded to the Trump administration’s move, imposing 25 percent tariffs on some 100 U.S. products worth nearly $50 billion.
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