This hectic week in American politics was capped off on Friday by an absurd volley of trade and tariff threats between the United States and China.
The fight has been simmering for months. President Trump and Chinese Chairman Xi Jinping have been back and forth, over and over again, trading tariffs and stern statements while the stock market dances around their every word.
While it may have looked as though China was going let the trade talks ruminate until the 2020 election, (perhaps in hopes of dealing with a less-savvy democratic president after such a time), an unexpected delay of tariffs by Donald Trump has provoked the Eastern superpower to act.
China announced major tariffs on US good early on Friday, Trump responded by tweet, and then with tariffs of his own.
All the while, Wall Street was sweating.
Wall Street’s three main indexes lost more than 1% on Friday after President Donald Trump ordered U.S. companies “to immediately start looking for an alternative to China” in response to Beijing’s threat to impose retaliatory tariffs on U.S. goods.
Trump gave no detail on how he might proceed with any such order, although he said he would be offering a response later on Friday.
Earlier in the day, China vowed to impose additional tariffs on goods worth $75 billion that include agricultural products, crude oil, small aircraft and cars. Tariffs on some products would take effect on Sept. 1 and others on Dec. 15.
The indexes were on course to give up their weekly gains made on hopes of stimulus measures from major central banks and governments as well as a solid batch of retail earnings.
Wall Street insiders were shaken.
“It’s a fair reaction from the markets. I don’t think anyone thought we’d get to this level,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
President Trump’s reticence to enact tariffs days ago was in hopes of staving off an economic hardship before the consumer-heavy holiday season.
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