After tweeting that the U.S. would add an additional ten percent tariff on $300 billion of Chinese goods starting Sept 1, President Donald Trump defended his decision, saying that butting heads with China now will produce a prosperous trade agreement in the future.
“I think the market reaction is anticipated,” the president said on Aug 7. “I would have maybe anticipated even more, but ultimately it's going to go much higher than it ever would have gone because China was like an anchor on us, China was killing us with [an] unfair trade deal.”
Since Trump’s tweet on Aug 1, major stock indexes fell significantly for the 2019 year.
“Major indexes fell three percent on Monday, the biggest drop for 2019,” wrote Politico. “They regained some lost ground on Tuesday but were lower again on Wednesday, driven by concerns of a protracted trade war. Investors flocked to safer alternatives, sending rates on 10-year Treasury bonds in a free fall as they fell six percent on Wednesday.”
Concerns over a long-period trade dispute arise from the already imposed 25 percent tariffs on $250 billion of Chinese goods, China’s tariffs on the U.S. and their threat to retaliate if Trump adds the Sept. 1 tariffs and no immediate trade deal in sight. On top of that, U.S. Treasury Secretary Steven Mnuchin on Aug 5 labeled China a currency manipulator and his department “will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions.”