The markets responded negatively to the latest news of U.S. President Donald trump imposing a 25 percent tariff on up to $50 billion in Chinese goods by plunging over 200 points at the open.
The measures by the Trump administration will affect Chinese goods “that contain industrially significant technologies” and that the action comes “in light of China’s theft of intellectual property and technology and its other unfair trade practices,” said Trump in a statement. In addition, Trump announced that the imposition of further tariffs could be on the horizon should China retaliate with tariffs of their own on American products, such as crops.
Related: Jamie Dimon: Tariffs Aren’t the Way to Go
A United States Trade Representative said the tariffs are set to begin on 818 items worth about $34 billion on July 6. Moreover, additional tariffs that affect 284 products totaling almost $16 billion could take effect after a review and public comment process.
ETFs that track the S&P 500 reflected the downturn as SPDRÂ S&P 500 ETF (NYSEArca: SPY) was down 0.50%, iShares Core S&P 500 ETF (NYSEArca: IVV) was down 0.49%, and the Vanguard S&P 500 ETF (NYSEArca: VOO) was down 0.48%.
China Expected to Retaliate
Tensions between the U.S. and China have been brewing as the Trump administration have been cracking down on trade practices that it deemed unfair. The Trump administration was already amidst an escalating trade conflict with Canada, Mexico and members of the European Union after Trump imposed tariffs on steel and aluminum.
Related: Trump’s Tariffs Just a Negotiating Ploy?
As expected, China did not take too kindly to the tariffs, but overall, the actions by the Trump Administration did not come as a complete surprise.
“We will immediately introduce taxation measures of the same scale and the same strength. All the economic and trade achievements previously reached by the two parties will no longer be valid at the same time,” said China’s Commerce Ministry in a statement to CNBC.
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