US$1 trillion wiped out of global markets led by tech carnage after China vows tariffs on 5,000 US products in trade war escalation
- US tech bellwethers were among the hardest-hit stocks, with Apple and Tesla both dropping more than 5 per cent
- Market sell-off resumed after China said it would impose 25 per cent duties on a portion of US$60 billion worth of US goods starting on June 1
The escalating US-China trade war wiped out more than US$1 trillion of stock market value on Monday, led by losses in the tech sector, after China announced it would respond to US tariff increases with additional duties on US$60 billion of American goods.
European shares lost 1.2 per cent and emerging-market stocks shed 1.7 per cent. The declines were the most severe in the US, with the Dow Jones Industrial Average and S&P 500 both dropping 2.4 per cent. The Nasdaq fell 3.4 per cent, its biggest daily percentage loss of the year.
“China’s tariff move today was expected, but the severity caught investors off guard,” said Dan Ives, a New York-based tech analyst with Wedbush Securities.
A battle on the China front is “the last thing” Apple and the tech sector need as investors “digest these threats from the White House and gauge retaliation impact from China over the coming days”, he said.
Asian markets extend sell-off after Wall Street’s US$1 trillion wipeout
US tech bellwethers were among the hardest-hit stocks. Intel fell 2.7 per cent, while Apple dropped 5.4 per cent and Caterpillar lost 5 per cent.
The market turmoil resumed after the Chinese government said soon before US financial markets opened that it planned to impose 25 per cent duties on a portion of US$60 billion worth of US goods, starting on June 1.
The Chinese Ministry of Finance said 2,493 US goods would be hit with a 25 per cent tariff; 1,078 items with a 20 per cent tariff; 974 items with a 10 per cent tariff and 595 items with a 5 per cent tariff.
Goods hit by the highest rate include cooking oils, frozen vegetables, wine, beer and other beverages, as well as industrial minerals and chemicals, textiles and clothing, jewellery, metal products, machinery parts and consumer items ranging from home appliances to condoms.
The announcement followed the Trump administration’s move to increase tariffs on US$200 billion of Chinese imports to 25 per cent from 10 per cent last Friday.
With the two countries’ economic and trade conflicts escalating, China’s Finance Ministry said the US government’s actions were “going against a mutual understanding of solving differences through discussions” and would only “damage interests on both sides”.
The Trump administration’s decision to implement the threatened tariff increases seemed abrupt as an agreement between the two countries appeared increasingly possible heading into last week.
But the negotiations deteriorated at the last minute after US President Donald Trump said in a tweet a week ago that he could increase tariffs on Chinese products.
Trump accused China of reneging on many terms to which it had already agreed, then followed through on his promise to implement the 25 per cent tariff increase.
“There is simply no economic precedent” for the two largest economies on the planet “suddenly slamming on the tariff ‘brakes’ in this manner”, said Nelson Dong, a senior partner at international law firm Dorsey & Whitney.
“The Administration’s Section 301 tariffs and China’s retaliatory tariffs will now further disrupt – or even break – many thousands of supply chains in both countries as local consumers either turn away from buying affected imports or are just forced to pay the resulting higher prices.”
