Dow's massive slide shows risks of a Trump trade war with China

Source: Washington Examiner | March 22, 2018 | James Langford

The Dow Jones industrial average posted the biggest drop in points, 724, since the 2008 financial crisis as President Trump’s tariffs on Chinese imports fueled growing fears of a trade war that could wipe out the economic gains under his administration.

While the drop was smaller in relative terms than those of a decade ago, reflecting the subsequent surge in the blue-chip index’s value, investors predict more to come, with China promising to fight “to the end” in any trade war. The broader S&P 500 slid 2.5 percent, and the tech-heavy Nasdaq Composite Index fell 2.4 percent.

“Buckle your seat belts,” said Greg McBride, chief financial analyst for Bankrate.com. “At a time when interest rates are rising, central banks are beginning to withdraw stimulus from markets and the odds of a trade war have grown, you can bet that markets will be volatile. Expect more of these ups and downs.”

The president’s plan for trade restrictions with China, outlined in a memo Trump signed Thursday, involves duties of 25 percent on goods in sectors such as aerospace, information communication technology, and machinery. His trade chief, Robert Lighthizer, has about two weeks to determine which items, specifically, should be included in the levies, which may have a combined value of $60 billion.

A comment period after Lighthizer’s recommendations would extend for at least a month, giving Wall Street time to express its concerns about a trade war between the two biggest economies on the planet.

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