Stop me if you’ve heard this before, stock markets fell after an escalation in the trade war with China. After a lovely Labor Day holiday, traders came into a down trodden market on Tuesday morning as S&P 500, Dow Jones, and Nasdaq futures all fell as we started the week. As of Tuesday morning, the losses stand at .9% for the Dow, .85% for the S&P 500, and a full 1% for the Nasdaq
This latest slide comes after President Trump enacted a new set of 15% tariffs on China that will reportedly affect $110 billion worth of imports, including the tech giant Apple. China did not take to this news kindly as they put into effect their own set of tariffs, mainly focused on U.S. agricultural imports. Even more troublesome is the fact that both tariff hikes seem to only be the beginning. President Trump and Chinese President Xi seem to be playing a game of “tariff chicken” as each has said they plan on hiking tariffs on certain goods up to 25%, it’s just a matter of who flinches first.
Not only do these trade wars put pressure on the global economy, but they are also affecting our domestic economy. Yes, the markets are down across the board, but lest we forget that the U.S. Treasury yield curve is still inverted too and has yet to show signs of correcting itself. The plot is indeed thickening.