China announced on Monday that it would impose new tariffs on $60 billion worth of U.S. products, three days after the Trump administration raised tariffs on $200 billion of Chinese products. China’s Ministry of Finance released a statement saying that the tariffs have been approved by the State Council and will range from 10% to 25% beginning June 1.
“China’s adjustment of tariff-adding measures is a response to US unilateralism and trade protectionism,” the ministry said. “In order to defend the multilateral trading system and defend its legitimate rights and interests, China has to adjust tariffs on some imported goods originating in the United States.”
Beijing’s announcement spooked stock markets early Monday, with all three U.S. indexes extending last week’s losses. The Dow Jones Industrial Average plunged more than 600 points, while the Standard & Poor’s 500 index was on track for its biggest slump since January 3. Meanwhile, the tech-heavy Nasdaq 100 was down 245.92 points, or 3.24% to 7,340.61.
China’s retaliatory levies come as the White House is expected to issue details on new tariffs on more than $300 billion worth of additional Chinese goods. In a Twitter post on Monday, President Trump warned China not to retaliate as things “will only get worse.”
“There will be nobody left in China to do business with. Very bad for China, very good for USA! But China has taken so advantage of the U.S. for so many years, that they are way ahead (Our Presidents did not do the job).” Trump said, “Therefore, China should not retaliate-will only get worse!”
Boeing Co (NYSE: BA) was one of the biggest decliners on the Dow with its shares losing $14.82, or 4.18% to 339.77 as of 12:26 p.m. ET. Morgan Stanley analysts believe that the aerospace giant is in a position of retaliatory tariff risk since most orders for its 737 plane are from China. Apple Inc. (NASDAQ: AAPL) declined $10.81, or 5.48% to $186.37 while Caterpillar Inc. (NYSE: CAT) tumbled 5.08% to $124.65.
Alec Young, managing director of global markets research for FTSE Russell said; “Investors are increasingly worried an anticipated second-half profit rebound may now evaporate as President Trump’s threat to tariff the remaining $325 billion in Chinese imports would disproportionately target consumer products like iPhones, thereby posing a greater threat to the consumption-driven U.S. economy,”