The stock market trended sharply downward in Friday midday trading following President Donald Trump’s suggestion that American companies should find alternatives to conducting business in China.
The Dow Jones Industrial Average declined 428 points, or 1.63%, on the heels of Trump’s Twitter storm, in which he accused the country of intellectual property theft and demanded that United States firms seek other options instead of operating in China. His comments came shortly after Federal Reserve chairman Jerome Powell took the podium to warn about the impact of escalating trade tensions between Washington and Beijing. (The S&P 500 and Nasdaq Composite plummeted a respective 1.96%, or 57 points, and 2.36%, or 189 points.)
“Our country has lost, stupidly, trillions of dollars with China over many years,” Trump wrote in a four-part tweet. “They have stolen our intellectual property at a rate of hundreds of billions of dollars a year, and they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far better off without them.”
He added: “The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must stop. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies home and making your products in the USA. I will be responding to China’s tariffs this afternoon. This is a great opportunity for the United States.”
The sell-off also comes after China announced that it would slap retaliatory tariffs on U.S. imports. In a statement, the Chinese Ministry of Commerce said it would impose levies of 5% on soybeans and crude oil starting Sept. 1 as well as tax another tranche of products, including automobiles, at 10% on Dec. 15.
The schedule matches the Trump administration’s own timeline for the fourth list of tariffed goods. Early last week, the U.S. Trade Representative said that the White House would delay its 10% levy on some of the $300 billion worth of products (or the “fourth tranche”) originating from China — such as mobile phones, laptops and toys as well as unspecified items of footwear and apparel — based on “health, safety, national security and other factors.” Originally scheduled to take effect on Sept. 1, the additional duty on some of those items will be suspended until Dec. 15.
Many companies have already begun relocating their supply chains to neighboring countries like Vietnam, Indonesia and Mexico as costs grow within their China-based supply chains. Some have also indicated that they may be left with no choice but to raise prices for consumers.
“While we are pleased with the decision to delay new tariffs on certain shoes, we are not satisfied,” Footwear Distributors and Retailers of America president and CEO Matt Priest previously told FN. “We will continue to fight for any exclusions on new tariffs, and we will fight to delay new tariffs on shoes until the entire tariff threat is lifted off the backs of American families.”
Trump’s Tariff Delays Are Not What You Think — Most Shoes Will Be Hit Next Month
What Wolverine, Capri and More Fashion Groups Are Saying About Trump’s New China Tariffs
Watch the highlights at the 2018 FNAAs.