Well, our trade war with China just increased in intensity as President Trump announced today that he will be enacting $250 billion worth of tariffs on Chinese goods in retaliation for China’s move to increase levies on American products by $75 billion. Yes, it sent Wall Street into a downward spiral, dropping some 600 points. Trump also called on U.S. manufacturers to fins another base of operations for the time being (via CNBC):
Stocks plunged on Friday after President Donald Trump ordered that U.S. manufacturers find alternatives to their operations in China. Apple led the way lower.
The Dow Jones Industrial Average closed 623.34 points lower, or 2.4% at 25,628.90. The S&P 500 slid 2.6% to close at 2,847.11. The Nasdaq Composite dropped 3% to end the day at 7,751.77. The losses brought the Dow’s decline for August to more than 4%.
The major indexes also posted weekly losses for the fourth straight time. The Dow dropped about 1% this week while the S&P 500 pulled back 1.4%. The Nasdaq lost 1.8%.
Friday’s decline added to a series of sharp moves down this month. The Nasdaq has now fallen at least 1% six times this month while the Dow has posted five drops of 1% or more. The S&P 500 has closed down 1% or more four times in August. Those moves come as the U.S.-China trade war intensifies while the bond market flashes a recession signal.
For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight....— Donald J. Trump (@realDonaldTrump) August 23, 2019
....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. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very....— Donald J. Trump (@realDonaldTrump) August 23, 2019
...unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%...— Donald J. Trump (@realDonaldTrump) August 23, 2019
...Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter!— Donald J. Trump (@realDonaldTrump) August 23, 2019
Trump also ripped the Federal Reserve for doing nothing (via NBC News):
Trump said in a statement Friday that the White House would be raising tariffs on $250 billion worth of Chinese products to 30 percent from 25 percent, effective Oct. 1. In addition, the 10 percent tax on the remaining $300 billion of Chinese imports will be raised to 15 percent on Sept. 1.
"China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!)," Trump tweeted.
The move followed Trump's Twitter tirade against his hand-picked Federal Reserve chairman, Jerome Powell, calling him an “enemy” who could pose a bigger risk to the United States than Chinese President Xi Jinping.
“As usual, the Fed did NOTHING! It is incredible that they can ‘speak’ without knowing or asking what I am doing, which will be announced shortly,” Trump tweeted. “We have a very strong dollar and a very weak Fed. I will work ‘brilliantly’ with both, and the U.S. will do great.”
We’ve seen this before; the market tanks and then recovers. Yet, this game Trump is playing with China is one that should’ve started years ago, though the potential for economic pain was high. Short-term pain for long-term gain is the playbooks it would seem, though the president should know, as he already does, that he’s messing with his re-election chances if he screws this up, along with giving China the ultimate high ground concerning our diplomatic and economic efforts between our two nations.