Stocks Fall After China Announces Retaliatory Tariffs

White House expects China to retaliate over trade tariffs

In retaliation, Beijing announced on Monday that it would raise tariffs on about $60 billion worth of American goods. The S&P 500 fell 65.48 points, or 2.27%, to 2,815.92 and the Nasdaq Composite 241.62 points, or 3.05%, to 7,675.32. The Dow fell more than 475 points at the open. European indexes were mostly down a bit more than 1%. The S&P 500 lost 1.67 per cent by mid-morning.

President Trump warned, "China should not retaliate-will only get worse!"

The result has been a volatile week-long roller coaster with no end in sight.

Last Thursday morning the Dow skidded 580 points, only to regain almost 470 by close of trading on Friday.

Some of the biggest chipmakers in the US lean heavily on China for their sales, making them particularly vulnerable to the worsening tensions between the two countries.

If all threatened tariffs - including the additional levies on goods from China and potential auto tariffs - were put into effect that would shave another $112.2 billion off of U.S. GDP. Iranian President Hassan Rouhani gave the remaining signatories 60 days to come up with a plan to shield his country from sanctions imposed by Trump after the U.S. withdrew from the deal.

"I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don't make a deal because companies will be forced to leave China for other countries", Mr. Trump tweeted on Monday. Too expensive to buy in China.

Trump, however, maintains that the tariffs will do greater damage to China's economy.

China will slap import surcharges on 5,140 USA products starting on June 1, with levies of 25 per cent on agricultural products such as honey, vegetables, coffee and various meats.

"I think that China felt they were being beaten so badly in the recent negotiation that they may as well wait around for the next election, 2020, to see if they could get lucky & have a Democrat win - in which case they would continue to rip-off the United States of America for $500 Billion a year", he tweeted.

Tariffs on Chinese goods increased from 10% to 25% on Friday, making the underlying cost of those items higher for USA customers. "I don't disagree with that", he said to Fox News' Chris Wallace.

"Their is no reason for the U.S. Consumer to pay the Tariffs, which take effect on China today".

Any softening in US stock prices would have an additional advantage from the White House perspective: It would add to the pressure on the Fed to cut interest rates.

'Also, the Tariffs can be completely avoided if you by from a non-Tariffed Country, or you buy the product inside the US (the best idea),' Trump added.

That's Zero Tariffs. Many Tariffed companies will be leaving China for Vietnam and other such countries in Asia.

Iowa Senator Joni Ernst and Kansas Senator Pat Roberts, both Republicans, said that farmers are tiring of the duress caused by tariffs but expressed hope for a deal that would benefit the country. -Chinese trade balance. Regulators have started targeting American companies in China by slowing down customs clearance for shipments and issuance of business licences.

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