U.S. stocks were trading sharply lower Friday as Wall Street reacted to the latest escalation in the trade fight between the U.S. and China.
Investor jitters were elevated on the final trading day of the week after Beijing vowed to fight back against the Trump administration’s latest threats of yet more tariffs on Chinese imports, renewing investor fears of a brewing trade battle between the world’s two biggest economies.
At noon, the Dow Jones industrial average was off its lows and down about 335 points, or 1.4%, led lower buy shares of Boeing and Caterpillar, which are exposed to trade risk via higher exposure to doing business with China.
U.S.-China trade tensions stepped up another notch after President Trump instructed the U.S. trade representative “to consider” slapping an extra $100 billion in tariffs on Chinese goods. China responded by indicating it wouldn’t back down, saying it would fight back “at any cost,” according to a statement from the Commerce Ministry.
The surprise move was a further escalation of the deepening dispute between the two economic powers, which just days earlier announced plans for $50 billion in import duties on each other’s goods. The earlier tariff threats roiled financial markets but they had rebounded Thursday on investor hopes the U.S. and China indicated would find a diplomatic solution.
Despite the market turbulence, investment pros are still confident a full-fledged trade war will not break out.
“Our view remains that a negotiated solution is most likely and so the tariffs ultimately won’t be implemented or will be much milder if they are,” said Shane Oliver, head of investment strategy at AMP Capital in Sydney. “However, negotiations could take months. In the meantime, there will be ongoing noise around the issue” and financial markets will remain volatile, he said.
European shares fell. France’s CAC 40 lost 0.2% and Germany’s DAX shed 0.4%. Britain’s FTSE 100 was unchanged. s
In Asia, Japan’s benchmark Nikkei 225 index closed down 0.4%, while South Korea’s Kospi slipped 0.3%. Hong Kong’s Hang Seng rose 1.1% after trading resumed following a holiday as investors caught up with the previous day’s global gains. Mainland Chinese markets remained closed for a holiday.
In U.S. economic news, the government reported that American employers added 103,000 jobs in March, below the 185,000 jobs analysts had forecast. Winter storms were cited as one reason for the slower hiring pace.