Stocks are down across Europe and in pre-market trading on Wall Street after China announced retaliatory tariffs on American imports.
Before the opening bell, the S&P is down 1.7 percent, with the Dow and the Nasdaq over 2 percent lower. A loss of each percent in American indices means losing billions of dollars in value for corporations.
Even before the announcement, American stocks saw the worst start in April since the Great Depression. The S&P 500 is in a 10-percent correction from its record high in late January.
Gold edged up on the news, trading $10 higher than in the previous session at $1,347 per ounce. The precious metal is traditionally a hedge against stock market volatility.
On Wednesday, the Chinese Finance Ministry said Beijing would hit 106 American products, including soybean, automobiles, and chemicals, with a 25-percent tariff, worth $50 billion. The move came in response to US levies on Chinese goods.
US President Donald Trump’s top trade adviser blamed the markets for not reacting to the “unbelievable” strength of the American leader’s economic agenda.
Navarro told CNBC that Trump’s “singular focus is on economic growth, rising wages and a strong manufacturing and defense industrial base.””If we hit all points… the market will go up.”
Another US official, who asked not to be named, told CNBC that “we’re focused on long-term fundamentals. We’re not really reacting to market fluctuations.”
The Chinese vice-minister of commerce said Beijing is ready for a trade war with the United States, albeit reluctantly, if Washington is looking for a fight.
“China does not want a trade war because no one will emerge as a winner,” said Wang Shouwen. “But if someone insists on fighting a trade war, we will be there.”
The official stressed that the Chinese authorities are still ready for dialogue and negotiations over balancing trade turnover between the world’s two biggest economies.
The statement followed China’s pledge to impose tariffs on nearly $50 billion in imports from the US. Beijing will reportedly introduce 25 percent levies on 106 American goods, including soybeans, cars, aircraft, beef, cigars and whiskey.
The step came in retaliation to the 25 percent tariff on over 1,300 Chinese products introduced by the Trump administration earlier this week. The US list covers machinery, electronics, uranium, flamethrowers and even dental devices.
The US measures mainly target goods that allegedly benefitted from China’s theft of US intellectual property. In response, Beijing reportedly hit a category of products manufactured in those US states that supported President Donald Trump during his election campaign.
At the same time, the Chinese Ministry of Commerce has reportedly filed complaint with the World Trade Organization over the tariffs introduced by the US.