It took less than 24 hours for China to respond to the latest salvo of tariffs fired off by U.S. President Donald Trump as Beijing announced it will impose $60 billion worth of tariffs on U.S. goods beginning on Sept. 24.
The new round of tariffs from China are said to affect a list of 5,207 products within a range of 5 to 10%. Both the U.S. and China have already slapped each other with tariffs worth $50 billion total.
Despite China’s countermove, the major U.S. indexes were all in the green–the Dow was up over 90 points, the Nasdaq up almost 70 points and the S&P 500 gained 13 points as of 10:45 a.m. ET.
After the markets closed yesterday, the Trump administration announced it would be moving forward with imposing a 10% tariff on $200 billion worth of Chinese goods that includes a step-up increase to 25% by the end of the year. The administration moved forward with the tariffs despite both economic superpowers in the midst of scheduled trade talks to ease tariff tensions.
The announcement of yesterday’s tariffs came just as the Dow Jones Industrial Average fell almost 100 points and the Nasdaq Composite lost 1.43% as trade war fears crept back into the U.S. capital markets despite effectively parrying their effects in August and for most of September.
Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be “Tariffed!”
— Donald J. Trump (@realDonaldTrump) September 17, 2018
The new round of U.S. tariffs on 10% of Chinese goods signals that the U.S. won’t relent on the application of pressure to force China’s hand in making a deal when actual negotiations materialize. Purportedly, the goals of the lower 10% figure is apparently two-fold–to swing voters towards Republicans when mid-term elections begin and to lessen the blow for shoppers as holiday shopping is set to start this fall.
The list of goods affected by the new round of tariffs was apparently modified by the White House, which removed about 300 goods from an initial list that included smart watches, certain chemicals, bicycle helmets, high chairs, and other goods. Despite this, the latest actions could no doubt ramp up trade tensions, which could negatively affect the U.S. markets, but thus far, that hasn’t been the case.
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