Global stock markets slumped Tuesday after President Donald Trump threatened to put tariffs on another $200 billion US in imports from China, and the Chinese government said it would retaliate, bringing tensions between the world’s two largest economies closer to a boil.
The Dow Jones industrial average lost 349 points, or 1.4 per cent, while the S&P/TSX composite index was off by 0.4 per cent.
The Hang Seng index in Hong Kong lost 2.8 per cent. Major stock indexes in Asia and Europe also took sharp losses. Trump’s new proposal calls for a 10 per cent tariff on $200 billion US in goods, and Beijing said it would respond with “comprehensive measures.” It doesn’t import enough goods from the U.S. to match the scale of Trump’s proposal but could adopt other methods.
Last week Trump ordered a 25 per cent tax on $34 billion US in Chinese imports and Beijing matched that total. Those tariffs won’t take effect until July 6, which leaves more time for the two countries to negotiate.
The Dow was trading at 24,640 points as of 11:08 a.m. ET. The S&P 500 index gave up 21.29 points, or 0.8 per cent , to hit 2,752.46. The Nasdaq composite fell almost one per cent, or 75.4 points, to reach 7,671.63.
In Toronto, the S&P/TSX composite index was at 16,316.48 points, down by 67.15.
In Europe, Germany’s DAX was down 1.1 per cent. The CAC 40 of France fell 1.2 per cent and in London the FTSE 100 lost 0.4 per cent.
The losses were even heavier in Asia, where Tokyo’s Nikkei 225 retreated 1.8 per cent and Seoul’s Kospi gave up 1.5 per cent. Indexes in Australia and India took smaller losses.
Industrial and technology companies took some of the worst losses as investors worried that the dispute could grow more intense and drag down global economic growth. Trump accused Beijing of being unwilling to resolve the dispute over complaints it steals or pressures foreign companies to hand over technology. China’s Commerce Ministry criticized the White House action as blackmail and said Beijing was ready to retaliate.
Aerospace company Boeing dropped 3.3 per cent to $342.84 and construction and mining equipment maker Caterpillar shed 3.6 per cent to $143.34. Apple fell two per cent to $184.80 and Facebook gave up 1.2 per cent to $195.97 US.
Automakers fell sharply. GM sank 3.7 per cent to $42.34 while Tesla slumped 5.4 per cent to $350.67 and Ford retreated 1/9 per cent to $11.77.
Shares of Chinese companies listed in the U.S. also slumped. E-commerce company JD.com lost 5.4 per cent to $41.38 and its competitor Alibaba slid 3.1 per cent to $202.03 Search engine Baidu declined 3.5 per cent to $259.61.
Oil prices turned lower, with U.S. crude down the most. It fell 99 cents to $64.86a barrel in New York, and Brent crude, the international standard for oil prices, fell 0.7 per cent to $74.78 a barrel in London.