Stocks dropped around the world — with the Dow Jones Industrial Average shedding 535.28 points Monday morning — as the back and forth in the U.S.-China trade war escalated from words to actions.
China boosted tariffs on $60 billion in U.S. imports by 25 percent Monday, according to a translation of the announcement by the Ministry of Finance. The move came in retaliation against President Trump’s move to boost U.S. duties on $200 billion worth of Chinese-made goods to 25 percent, up from 10 percent.
Those higher duties raise costs on accessories companies making goods in China, but Trump is also working to boost tariffs on other shipments from the country, which would likely hit the apparel world hard.
After about an hour of trading, the Dow was down 2.1 percent to 25,407.09. Among the U.S.-traded fashion and retail companies taking a hit in the market were G-III Apparel Group, down 6.9 percent to $34.96; Tapestry Inc., 5.4 percent to $30.49; Tiffany & Co., 4.8 percent to $99.78; Alibaba Group Holding, 4.7 percent to $169.68; L Brands Inc., 4.5 percent to $22.86; Stitch Fix Inc., 4.5 percent to $24.18, and Ralph Lauren Corp., 4.4 percent to $118.81.
While experts and investors are certainly worried about the fallout — in terms of economic growth and trading volatility — Trump has continued to push his position hard and almost narrate the geopolitical back and forth on Twitter.
Trump has said the trade war works for U.S. because it fills the Treasury with billions from tariffs. But those payments to bring goods across the border are made by companies that will eventually boost prices for consumers to compensate.
Trump is emphasizing the long term.
“There is no reason for the U.S. consumer to pay the tariffs, which take effect on China today,” the President tweeted Monday morning. “This has been proven recently when only 4 points were paid by the U.S., 21 points by China because China subsidizes product to such a large degree. Also, the tariffs can be…completely avoided if you [buy] from a non-tariffed country, or you buy the product inside the USA (the best idea). That’s Zero Tariffs. Many tariffed companies will be leaving China for Vietnam and other such countries in Asia. That’s why China wants to make a deal so badly!…There will be nobody left in China to do business with. Very bad for China, very good for USA!”
Trump contends China has taken advantage of the U.S. for years and is trying to walk a fine line to win lasting concessions from President Xi Jinping.
“I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries,” Trump tweeted. “Too expensive to buy in China. You had a great deal, almost completed, & you backed out!”