Stocks had a long fall on Tuesday morning after President Donald Trump called himself a “Tariff Man,” stressing he will not hesitate to raise tariffs on China if it does not agree to fundamentally change its trade practices.
The Washington Post reported that the Dow Jones Industrial Average closed down nearly 800 points and the S&P 500 dropped more than 3 percent on the day, a sharply negative turn one day after markets were jolted by news that Trump reached a trade cease-fire with Chinese President Xi Jinping.
“Investors are spooked by President’s Trump handling of the trade war with China,” Mark Zandi, chief economist at Moody’s Analytics, wrote in an email. “Despite the arrangement Trump and Xi agreed to last week in Argentina, they are nervous that the negotiations will go off the rails and the trade war will escalate.”
Zandi cited higher interest rates, lower corporate earnings growth and too-high valuations as other factors driving Wall Street fears.
“It is hard to see the bull market resuming as long as the President continues to pursue his trade war,” he added.
In a Tuesday morning tweet, Trump raised the possibility that the 90-day trade truce he brokered last weekend with Xi could be extended if the two nations are making progress toward a broader deal. That agreement froze U.S. tariffs while the two countries negotiate.
But investors appeared to pay greater attention to Trump’s threat, which suggests he will proceed with plans to raise tariffs on $250 billion in Chinese goods from 10 percent to 25 percent if talks fail.
“President Xi and I want this deal to happen, and it probably will. But if not remember, I am a Tariff Man,” Trump said in a series of tweets.
“When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so,” he continued. “It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN.”