The stock markets plunged Monday morning after President TrumpDonald TrumpJan. 6 panel faces double-edged sword with Alex Jones, Roger Stone Trump goes after Woodward, Costa over China Republicans seem set to win the midterms — unless they defeat themselves MORE threatened to raise tariffs on $200 billion in Chinese goods, possibly derailing a trade deal that was expected to be reached as early as this week.
Trump roiled the waters Sunday by threatening to dramatically increase tariffs on $200 billion in Chinese goods and set new tariffs for an additional $325 billion in goods.
The president then emphasized his threat Monday morning, tweeting, “The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!”
The unsettling prospect of renewed trade hostilities between the world’s two largest economies sent stock indexes reeling on Monday.
The Dow Jones Industrial Average plunged more than 400 points, or 1.6 percent, while the S&P 500 dropped nearly 45 points, or 1.5 percent, and the Nasdaq composite fell 145 points, or 1.8 percent, the largest one-day market decline since January.
It was a dramatic and stomach-churning reversal from Friday, when Vice President Pence told CNBC that the president was “very hopeful” about reaching a deal with China soon.
The markets finished strongly on Friday, with the Dow closing within a few hundred points of its all-time high, and the S&P 500 finishing within a point of the all-time high it reached late last month.
It’s unclear whether Trump’s tweets are a last-minute negotiating tactic before a deal is finalized or whether the talks are breaking down.
Billionaire investor Warren Buffett warned on Monday that a trade war between the United States and China would play havoc with the global economy.
“If we actually have a trade war, it would be bad for the whole world, and could be very bad, depending on the extent of the war,” Buffett told CNBC in an interview.
Updated at 9:55 a.m.