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New China Tariffs, Trump’s Response, Worry Investors

Stock markets dropped hundreds of points on Friday amid rising tensions between China and the United States.

Photo by Scott Olson/Getty Images

China announced that a new round of tariffs on American goods exported to them would be taxed anywhere between 5 and 10 percent, and would be implemented on September 1 of this year. The tariffs are poised to affect around $75 billion of American products, and were a retaliatory response from Beijing over planned tariffs from the United States.

President Donald Trump responded Friday morning by tweeting out his ire toward Beijing. Beyond that, he also urged American companies to stop doing business with Chinese partners.

Among the main points of Trump’s tweets, the president stated his belief that no partnership with China was better than an unfair one.

“We don’t need China and, frankly, would be far better off without them,” Trump wrote.

Trump also “ordered” American businesses to “start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.” He promised to make more announcements on the tariffs Friday afternoon.

“Our Economy, because of our gains in the last 2 1/2 years, is MUCH larger than that of China. We will keep it that way!” Trump wrote.

In response to the rising escalations between the two nations, the stock markets responded negatively, dropping by hundreds of points across many measures. The Dow Jones Industrial Average, for example, from 11:00 a.m. EST (just one moment after Trump’s tweets were sent) to 12:00 p.m. EST, saw a drop of more than 515 points, and showed continued signs of possibly dropping throughout the rest of the business day.

Earlier this month, the yield curve between 10-year bonds and 2-year bonds inverted, CNBC reported. Typically, when the yield curve inverts, it’s a harbinger of a recession being on its way, although it usually takes several months for one to come about.

Yet the markets, already worried about the possibility of a recession in the near future, were done no favors on Friday due to the war of words and trade between China and the U.S.



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