Trade tensions between the United States and China dragged the Dow down 200 points at Monday morning’s market open after U.S. President Donald Trump introduced a 25 percent tariff on $50 billion of Chinese goods last Friday. After President Trump’s opening salvo, China countered with a 25 percent tariff on $34 billion of U.S. goods.
According to President Trump, Chinese goods affected by the tariffs include those “that contain industrially significant technologies.” The affected 818 Chinese imports was worth about $34 billion–a measure that would take place on July 6. An additional round of tariffs worth $16 billion on Chinese goods will require approval, which could bring the total to $50 billion worth of Chinese goods if approved.
Related: China ETFs Sink on News of Trump Tariffs
The Chinese Ministry of Commerce said the tariff on U.S. goods would include soybeans, electric vehicles, hybrid vehicles, seafood, and pork. In total, China’s proposal would include 659 U.S. goods worth $50 billion.
In turn, the markets responded negatively to the news, sending the Dow into the red for the fifth straight day. As such, ETFs that track the Dow were also in the red–SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was down 0.69%, ProShares Ultra Dow30 (NYSEArca: DDM) was down 1.39% and ProShares UltraPro Dow30 (NYSEArca: UDOW) was down 2.9%.
Related: Dow Sinks 200 Points after Trump Imposes Tariffs on China
“There are many problems with tariffs. First and foremost is that they benefit far fewer people than they harm,” said Ed Yardeni, president and chief investment strategist at Yardeni Research. “They are intended to boost employment in the industries that benefit from such protectionism, but they immediately raise prices of the protected goods for all consumers.”
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