The U.S. stock slumped on Friday after China announced to impose additional tariffs on U.S. imports worth about 75 billion dollars in response to the newly announced U.S. tariff hikes on Chinese goods.
A total of 5,078 U.S. products will be subject to additional tariffs of 10 percent or five percent. The tariff hikes will be implemented in two batches and take effect at 12:01 Beijing Time (0401 GMT) on Sept. 1 and at 12:01 (0401 GMT) on Dec. 15, respectively, according to the statement made by China’s Customs Tariff Commission of the State Council on Friday.
The Dow Jones Industrial Average was down 623.34 points, or 2.37 percent, to 25,628.90. The S and P 500 was down 75.84 points, or 2.59 percent, to 2,847.11. The Nasdaq Composite Index decreased 239.62 points, or 3 percent, to 7,751.77.
On the same day, U.S. Federal Reserve Chairman Jerome Powell warned that trade policy uncertainty is dragging down the global economy and leading to weak manufacturing and capital spending.
U.S. manufacturing purchasing managers index (PMI) dropped to 49.9 in August, flashing a sign of contraction for the first time since September 2009.
Several U.S. industrial associations also sent a warning statement.
Senior Vice President of the National Retail Federation David French said that It’s impossible for businesses to plan for the future in this type of environment, adding that the administration’s approach clearly is not working, and it only deteriorates the situation.
Roger Johnson, president of the National Farmers Union (NFU), also said that the Trump administration is damaging American farmers’ exporting market, and the situation that U.S. agriculture faces is catastrophic.
Mcron Brilliant, executive vice president and head of International Affairs, U.S. Chamber of Commerce, said that the escalating trade tensions between the U.S. and China has brought a great pressure to the U.S. economy.
“We do not want to see a further deterioration of US-China relations. We urge the administration and the government of China to return to the negotiating table to complete an agreement,” Brilliant said in the statement.
The Columbia Broadcasting System (CBS) also said recently that U.S. tourism is felting the brunt of the trade friction.
It cited statistics from Tourism Economics, an Oxford Economics company, which predicted that the number of Chinese tourists will reduce by two million next year, and the U.S. tourism will lose nearly 11 billion U.S. dollars.
China’s imposition of additional tariffs is a forced response to U.S. unilateralism and trade protectionism, China’s Customs Tariff Commission of the State Council said.
The U.S. government announced on Aug. 15 that it will impose additional tariffs of 10 percent on Chinese goods worth about 300 billion U.S. dollars, effective on Sept. 1 and Dec. 15, respectively, in two batches.