With the imminent fears regarding a trade war between China and the United States, The Dow Jones industrial average has closed down by more than 400 points. More than 1,100 points were wiped off the index during the last two days.
The drop meant that the Wall Street closed at its worst week since January 2016, with all the three major indexes experiencing tumbles. The Dow lost 1.8 percent or 424 points, to 23,533, bringing its weekly drop to 1,400 points. The S&P 500 dropped by 2.1 percent or 55 points to 2,588. The Nasdaq dropped by 2.4 percent or 174 points to 6,992.
Banks and technology companies were the ones that sustained some of the hugest losses on the Dow. 5.9 percent was lost by Applied Materials, and Bank of America dropped by 4.5 percent as the investors fear that an intensifying dispute between Beijing and Washington will affect businesses in the United States, especially the companies that perform a lot of sales abroad.
The huge drops for the Dow happened following the revelation of Donald Trump, the President of the United States of America, of a plan last Thursday to impose a maximum of $60bn in new tariffs on goods from China. He also declared limitations on the investment of the country in the United States as a payback for what his administration claims are years of intellectual property theft.
Just before the signing the trade action, Trump said that it was “the first of many” – as he studies to correct what has been regularly called as “unfair” trade deals with various countries around the world.
When asked earlier on Friday regarding the drops on the stock market, Trump said that he was not concerned that the new tariffs would be a burden on the stock market. He added that “China is going to end up treating us fairly.” With regards to the new tariffs of up to $60bn, Beijing has so far only implied that it will defend itself.
On Friday Morning, China revealed a $3 billion list of goods from the United States that could see additional tariffs. The Commerce Ministry said that higher duties on apples, steel pipes, pork, and other goods would offset the losses of China because of the tariff hike of President Trump on imports of steel and aluminium which the president declared at the beginning of the month.
Beijing also criticised Trump over his announcement of the $60bn in tariffs, as it said that it would not back down in the light of the new measures. Beijing gave no indication of its probable response. However, a spokesperson from the foreign ministry said that China was “fully prepared to defend” the interests of the country.
Hua Chunying, the spokesperson, stated: “We don’t want a trade war, but we are not afraid of it.”