U.S. President Donald Trump is ready to commence with an imposition of $200 billion worth of tariffs on Chinese goods despite scheduled trade talks with China to ease trade tensions. The news had little effect on the major indexes in the early trading session to start the week except for the Nasdaq Composite, which posted a loss of 75 points as of 10:45 a.m. ET Monday.
The new round of tariffs on 10% of goods is less than the original 25% that the Trump administration put out earlier, but nonetheless, it 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. 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.
In total, the U.S. and China have already imposed $50 billion of tariffs on each other, making the path for the U.S. stock market a jittery one albeit towards record highs, such as the S&P 500 recording the longest bull market in history. Despite this, both sides can agree that tariffs are not beneficial in the long run.
“We have always maintained that the only correct means to resolve the trade dispute is through dialogue and consultation on an equal basis with mutual trust and respect,” said Chinese ministry spokesman Geng Shuang .
Nasdaq Stumbles to Start the Week
The news of tariffs didn’t sit well with the Nasdaq as familiar names like Apple and Amazon helped to drag the index down. Overall, the tech sector took a 0.34% hit as shares of Apple fell by 1.4%
JD.com was the biggest decliner with a 6.5% drop, while another tech giant Netflix was also down by 2.7%. After posting strong gains during the month of August, the Nasdaq is struggling out the gates for September as the fear of tariffs begins to creep back into the markets.
“Investors are slowly starting to realize that these new tariffs could be extremely disruptive to the supply chain,” said Art Hogan, chief market strategist at B. Riley FBR in New York.