U.S. stocks tumbled on Friday morning after the Chinese government unveiled tariffs on additional $75 billion worth of American goods in retaliation for President Trump’s latest planned hike.
The tariffs range from 5% to 10% and some will come into effect starting September 1, while the rest will take effect from December 15. The levies will be placed on more than 5,000 U.S. items.
Some of the items targeted by the tariffs include agricultural products such as soybeans, small aircraft, and crude oil. China is also reinstating a 25% tariff on American automobiles as well as a 5% tariff on auto parts, according to the country’s commerce ministry.
“China’s decision to implement additional tariffs was forced by the U.S.’s unilateralism and protectionism,” the ministry said in a statement.
Earlier this month, Trump announced plans to increase tariffs on another $300 billion worth of Chinese goods starting September 1, but postponed a portion of that to December 15 to protect Americans from higher prices during the holiday season.
The U.S. stock market reacted negatively to the tariff news with the Dow losing 130 points, or 0.5%, at 26,118 and the tech-heavy Nasdaq dropping 0.6% at 7,947. The broader S&P 500 index also fell 0.4% at 2,912.
Shares of U.S. auto and auto parts manufacturers and major oil producers tumbled in the early minutes of regular trade.
Tesla (NASDAQ: TSLA) dropped 1.2%, General Motors (NYSE: GM) declined 0.27%, Caterpillar (NYSE: CAT) was down 1.04%, and Ford Motor (NYSE: F) fell 0.44%. Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) slipped 0.17% and 0.14%, respectively.
Meanwhile, Fed boss Jerome Powell has said there is no “rulebook” for trade war and promised to “act as appropriate” to the economic expansion going.
In prepared comments for delivery at the Jackson Hole Symposium in Wyoming, the central banker said: “There are, however, no recent precedents to guide any policy response to the current situation. Moreover, while monetary policy is a powerful tool that works to support consumer spending, business investment and public confidence, it cannot provide a settled rulebook for international trade.”
