And the US-China trade war continues!
While investors were looking forward to an end to the ongoing trade war between the US and China in this month’s negotiations, things took an uglier turn.
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On May 10, President Trump announced that the United States would be increasing tariffs from 10% to 25% on $200 billion of Chinese imports and also plans a further tarriff on $300 billion worth of goods. China, known for retaliating hard, landed a full-blown punch and announced on Monday that it would impose tariffs on $60 billion of US imports starting on June 1.
The stock markets took a hard hit as the tit-for-tat escalations continued. The S&P 500 Index (SPY) fell 2.4% while the tech-heavy NASDAQ Composite Index (QQQ) closed with a loss of 3.4% on May 13. The Dow Jones Industrial Average also closed on May 13 with a loss of 2.3%.
Not only did the US market suffer the consequences, but the Chinese stock markets also plummeted. The Financial Times reported that the CSI 300 Index declined as much as 1% on May 13 while the Hang Seng China Enterprises Index, comprising large-cap Chinese stocks, closed 1.5% lower on May 13.
Implications of the US-China trade war
The ongoing trade war could have catastrophic effects on various sectors. Many economists believe it could have an impact on global economic growth as well. China retaliated, saying the United States tried to change the terms of the negotiations midway through the talks.
Almost all US sectors were affected by the recent trade talks. Wall Street analysts had expected retail-hardline and -softline, semiconductors, automobile, agriculture, and auto parts stocks to take a hit when things take a downward turn with the trade deal.