Stocks turn negative on Trump's new China tariffs

Stocks turn negative on Trump's new China tariffs

Stocks dropped sharply Thursday after President TrumpDonald John TrumpTed Cruz knocks New York Times for 'stunning' correction on Kavanaugh report US service member killed in Afghanistan Pro-Trump website edited British reality star's picture to show him wearing Trump hat MORE announced new tariffs on Chinese goods, turning negative on fears of growing economic damage from the yearlong trade war.

The Dow Jones Industrial Average lost a 311-point gain and closed 281 points below its Thursday open after Trump announced a 10 percent tariff on more than $300 billion worth of Chinese goods.

The Nasdaq composite and S&P 500 also lost gains of more than 1 percent, closing with losses of 0.8 percent and 0.9 percent respectively after Trump posted a series of tweets announcing the tariffs.

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Trump said that while two days of trade talks between the U.S. and China in Shanghai this week were constructive, he decided to impose new tariffs because of a series of broken promises from Beijing.

“We thought we had a deal with China three months ago, but sadly, China decided to re-negotiate the deal prior to signing. More recently, China agreed to buy agricultural product from the U.S. in large quantities, but did not do so,” Trump said tweets posted just before 1:30 p.m.

“Additionally, my friend [Chinese] President Xi [Jinping] said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die!”

Trump said the new tariffs would be imposed on Sept. 1, but expressed optimism in pending talks with China. 

“We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!” Trump concluded.

The new tariffs would cover the roughly $300 billion in Chinese imports to the U.S. not already subject to Trump’s 25 percent tariff on $250 billion in goods from China. Trump had threatened to impose import taxes on the goods earlier this summer, but struck a temporary truce with Xi in July. 

Speaking to reporters shortly before the market closed, Trump brushed off the stock slide and expressed comfort with his latest escalation.

“I’m not concerned at all," Trump said. "I expected that a little bit.”

Trump added that he believes Xi “wants to make a deal, but frankly he’s not going fast enough.”

The U.S.-China trade war has taken a toll on both economies, with manufacturers facing higher costs and fewer foreign orders. 

China’s retaliatory tariffs on U.S. crops and livestock have also cost the ailing American agriculture sector billions of dollars amid other financial blows.

While most of the Chinese exports previously taxed by Trump were industrial parts, chemicals, technical equipment and other component products, the new tariffs will cover and likely raise prices of hundreds of essential consumer goods. 

Updated at 4:04 p.m.

Jordan Fabian contributed.