The latest developments in the trade war between the US and China sent already jittery global financial markets into overdrive on 23 August, increasing concerns about another financial meltdown.
Much of the drop in Wall Street share prices were down to belligerent tweets from President Trump, after his gut reaction to the news that China would be raising tariffs on $75bn US imports such as agricultural produce, crude oil, aircraft, and vehicles.
In one of his tweets, President Trump said he would order all US companies based in China to leave the country. Although, he did not explain how he could actually litigate for a move of this nature.
Raised Tariffs
From the evening of 23 August, President Trump announced he would be raising tariffs from 1 October 2019 from 25% to 30% on Chinese imports which amount to $250bn in total.
This was in retaliation to a Chinese announcement that a two-stage implementation of new tariffs would impact on about $75bn of US imports, to be actioned in September and December.
In a series of tweets made on the Friday evening, Mr Trump claimed the US would raise its tariffs on $250bn of Chinese imports from 25% to 30% starting on 1 October.
Mr Trump also announced that the new 10% tariff on $300bn of Chinese imports already announced would be increased to 15%.
The 10% tariff plan had been announced on 1 August, as Mr Trump stated China had not met its promises to buy increased amounts of US agricultural produce.
This tariff is due to be imposed on Chinese products such as clothing and electronics, however, plans to introduce it at the start of September were delayed until December so US consumers could take advantage of cheaper prices for Christmas and Black Friday shopping.
Global Impact
This latest spat in the US-China trade war didn’t just impact on Wall Street markets but caused repercussions throughout the world.
Mr Trump said that the increased duties announced by the Chinese were “politically motivated”, and they were trying to take advantage of the US.
He tweeted: “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!”
How did markets react?
Some of the impacts on financial markets included a loss of over 620 points to the Dow Jones Industrial Average, and the UK FTSE 100 and German DAX moving into negative positions.