Dow drops more than 550 points as trade war fears rattle stocks

China US tariffs

The Dow was on track to open 200 points lower on Friday after President Trump threatened to escalate a confrontation with China over trade. President Donald Trump on Thursday said he would consider adding another $100 billion worth of products to the list of Chinese imports potentially subject to tariffs. That move was a direct reaction to the tariffs on $50 billion in Chinese goods that the White House detailed on Tuesday. Beijing will reportedly introduce 25 percent levies on 106 American goods, including soybeans, cars, aircraft, beef, cigars and whiskey. China is the biggest buyer of US soybeans, picking up about a third of the entire USA crop.

Since Trump lobbed the first volley in this war of words and tariffs on March 1, the S&P 500 index of US stocks has fallen around 4%.

The U.S. National Retail Federation accused Trump of "playing a game of chicken with the nation's economy".

"Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers", Trump said. Tariffs are one strategy for leveling that playing field. They say additional tariffs could further impact the economics of many Northern Illinois families.

When queried on whether the USA tariffs against the People's Republic of China were only a negotiating ploy, the top adviser to Trump, Lawrence Kudlow admitted that it is part of the process. Most major US trading partners are now exempt from what were initially global steel and aluminum tariffs.

European markets have edged down this morning after President Donald Trump reignited fears of a trade war, threatening to impose a further $100bn (£71.3bn) of tariffs on China. Tariff wars are so last generation.

If China "were to try and respond in kind, there would not be enough United States goods to tariff", said Alex Wolf, an emerging markets economist at fund manager Aberdeen Standard Investments.

"We can negotiate between the American and Chinese sides on this", he said. "Yes, we feel like a casualty". They either sell billions of dollars of goods there or make some of their products in China, or both.

Wall Street analysts, like markets, can't agree on whether there's a global trade war brewing.

January 2018: Trump targets Chinese-made solar panels and washing machines with tariffs of 30 percent and 20 percent, respectively. The list of products by Trump involved products that can be easily replaced. Even after that, it's not clear when the tariffs would be applied.

On Wednesday, China unveiled a list of 106 US goods - from soybeans and whiskey to frozen beef and aircraft - targeted for tariffs, in a swift retaliatory move only hours after the Trump administration proposed duties on some 1,300 Chinese industrial, technology, transport and medical products.

So far, only the tariffs on steel and aluminum have taken effect, but Trump's latest threats take the dispute to a new level: China can not retaliate in kind since it only imports $130 billion in United States products, meaning it would have to find another way to respond.

What's the next move in this saga?

On Friday Caterpillar, a construction equipment maker, slid $5.14, or 3.5 percent, to $142.99 and Boeing, an aerospace company, lost $10.28, or 3.1 percent, to $326.12.

Trump said he was considering tariffs on $100 billion more in Chinese exports, which would triple what the United States is already planning. "We simply can not understand why the president would use American footwear consumers as a bargaining chip in his fight with China".

Even so, the possibility has farmers in IL anxious.

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