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Stocks Drop on Wall Street as Trade Fight Grows Between U.S. and China Stocks Wobble on Wall Street as Trade Fight Grows Between U.S. and China
(about 3 hours later)
Stocks on Wall Street fell sharply on Wednesday amid an escalating trade dispute between the United States and China, the world’s two biggest economies, that investors fear could derail the current economic upturn. Stocks sank again early Wednesday amid an escalating trade dispute between the United States and China that investors fear could derail the current economic upturn, but managed to regain some ground by midday.
Washington and Beijing have announced tariffs against each other, with America’s actions the latest in a series of protectionist moves by the Trump administration. In recent weeks, President Trump, who has long accused China of engaging in unfair trade practices, has pushed for penalties against Chinese products like steel, aluminum, aircraft parts and flat-screen televisions. China has responded in kind. Washington and Beijing have unveiled a series of tariffs and counter-tarrifs in recent days, with China saying Wednesday that it planned to impose some $50 billion in import duties on soybeans, cars, chemicals and other goods from the United States.
The moves followed President Trump’s recent decision to place tariffs on steel, aluminum, aircraft parts, flat-screen televisions and other products from China, which Mr. Trump has long accused of engaging in unfair trade practices.
Investors had initially seemed willing to discount the possibility of a trade war, perhaps in the belief that the White House’s protectionist rhetoric would fade amid negotiations through traditional channels. But the tit-for-tat tariff announcements from the United States and China may be stripping some of that confidence from investors.
“The scale and speed of Mr. Trump’s actions would have been difficult to predict at the start of the year,” analysts at Deutsche Bank said in a note to clients on Wednesday before American markets opened. “The growth outlook is more uncertain than it was.”“The scale and speed of Mr. Trump’s actions would have been difficult to predict at the start of the year,” analysts at Deutsche Bank said in a note to clients on Wednesday before American markets opened. “The growth outlook is more uncertain than it was.”
The latest volley of tariffs between the United States and China have mostly involved advanced manufacturing technologies, a dispute that parallels the countries’ fight over steel and aluminum. The overall value of the duties is small given that total trade between China and the United States amounts to around $650 billion a year. But economists and investors say the tensions could ratchet up quickly, and that the tariffs could become more punishing. The latest volley between the United States and China has mostly involved advanced manufacturing technologies, a dispute that parallels the countries’ fight over steel and aluminum. The overall value of the duties at issue is small given that total trade between the two countries amounts to around $650 billion a year. But economists and investors say the tensions could ratchet up quickly, and that the tariffs could become more punishing.
The Trump administration’s protectionist moves have helped fuel a reversal of many of the stock market gains that Mr. Trump has touted since taking office. The Dow Jones industrial average, for example, has recently slipped to its lowest level of the year, despite generally positive economic growth around the world and tax legislation in the United States that has helped bolster corporate profits. The growing tensions have helped fuel a reversal of many of the stock market gains that Mr. Trump has touted since taking office. The Dow Jones industrial average, for example, has recently slipped to its lowest level of the year, despite generally positive economic growth around the world and tax legislation in the United States that has helped bolster corporate profits.
The trade dispute is also rippling into global commodities markets. Cotton prices and soybean prices tumbled more than 2 percent on Wednesday after China announced its tariff plans.
Analysts at Goldman Sachs said that the imposition of tariffs on soybeans, an agricultural staple in Midwestern swing states, was a sign of worsening friction between Washington and Beijing.
“We view the inclusion of soybeans in today’s announcement as political in nature and reflective of the escalation of the trade dispute with the United States,” Goldman Sachs commodities analysts said in a note to clients.
If there was a bright spot in the early sell-off on Wednesday, it was that there was little sign of a rush to the safety of United States Treasury bonds. Instead of falling sharply — a signal of a panicky market — yields on the 10-year Treasury note were stable.