The latest escalation of the ongoing trade war between the US and China has made the US stocks nosedive. The escalation in the trade war was fanned by Trump’s tweet on Sunday that tariffs on $250 billion worth of Chinese goods will be raised to 30% from 25%.
The new changes are scheduled to come into force on October 1, while hike in duties on another $300 billion worth of Chinese goods will be revised with effect from September 1. “Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer,” was what President Trump stated in his tweet. He reiterated his will not to sustain it any more.
In fact, he even went on to add that he may even declare the trade war as a national emergency. It should also be noticed that Trump even asked the US companies to move their Chinese operations elsewhere.
The Dow Jones Industrial Average lost 623.34 points This has even eroded the gains achieved over the last week. The trade war has been the sole reasons for the impending issues in the global economy. It should be noticed that China and the US are two of the world’s largest economies and the year long trade war has indeed been quite dampening for the economic and corporate earnings.
The executive director at J.P. Morgan, Mr Adam Crisafulli rightly puts it – “The problem facing stocks isn’t restrictive monetary policy but instead Trump’s destructive trade policy”. Trump’s overly nationalistic approach has been moving towards being a deathblow to the economy and lending rates. The sooner the Trump administration understands this, the better it would be.