Asian stocks tumble after new Trump tariff threat - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Stocks end lower, wiping out Dow's gains for year after new Trump tariff threat

Posted: Updated: Jun 19, 2018 1:33 PM
A pedestrian walks past a stock indicator displaying the closing rate of the Tokyo Stock Exchange in Tokyo on June 19, 2018. A pedestrian walks past a stock indicator displaying the closing rate of the Tokyo Stock Exchange in Tokyo on June 19, 2018.
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The Dow erased its gains for the year Tuesday, finishing 287 points lower and extending a global stock sell-off triggered by President Donald Trump's threat to levy billions of dollars more in tariffs on Chinese goods.

It's the latest escalation in a dispute that Wall Street fears could develop into a full-blown trade war. Trump has directed the U.S. Trade Representative to prepare new tariffs on $200 billion in Chinese imports. The president accused Beijing of being unwilling to resolve the dispute over complaints it steals or pressures foreign companies to hand over technology. China's Commerce Ministry criticized the White House action as blackmail and said Beijing was ready to retaliate.

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The Dow Jones industrial average, after falling nearly 420 points at its low, closed down 287.26 points, or 1.2 percent, at 24,700, according to Bloomberg data. That means the blue-chip index has slipped below the level where It finished 2017 - 24,719.22. Roughly half of the Dow's losses are due to two stocks, Boeing, which fell $13.61 a share, or 3.8 percent, and Caterpillar, which declined $5.39, or 3.6 percent.

Lloyd Blankfein, CEO of investment bank Goldman Sachs, was asked at an event in New York whether the tensions with China qualified as a trade war, game of chicken or a sideshow.

"I will let you know," he told the audience at The Economic Club of New York. "The problem is how many times can you be on the edge of your seat and waiting for a shoe to drop.'

Still, like other Wall Street pros have said, Blankfein viewed the Trump administration's tactics as "part of a negotiating pattern" but didn't think the U.S. had entered "a suicide pact' or that it would cause the "economy to collapse.'

Uncertainty over how severe the U.S. dispute with China could get appears to be spurring investors to trim risk in their investments portfolios, says Craig Erlam, a senior market analyst at Oanda, a trading firm in New York.

"The clear escalation that's occurred in recent days has shaken investors," he told USA TODAY. "It's difficult to see how and when this ends. And it's difficult to fully grasp just how much damage will be done in the process."

Global stocks tanked overnight, with shares in China taking the biggest hit. The Shanghai composite fell 3.8 percent and the Shenzhen A Share index, which is similar to the technology-packed Nasdaq composite, plunged 5.8 percent.

By ending the day lower, the Dow suffered its first six-day losing streak since March 2017.

More: Trump threatens to slap new tariffs on $200 billion in Chinese goods

More: Global stocks tumble after new Trump tariff threat

U.S. companies caught in the middle of the trade fight between the world's two biggest economies "are not immune" and could see their sales and earnings come under pressure if the situation worsens and commerce slows, Erlam said.

Trump said the new potential tariffs, which come days after his administration leveled $50 billion in duties on a wide array of Chinese goods, were a response to the retaliatory trade barriers the Chinese government imposed Friday. Trump said the latest round of tariffs - which he set at 10 percent - will go into effect if Beijing moves forward with its own import restrictions.

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Hong Kong's Hang Seng fell 2.8 percent. Tokyo's Nikkei 225 retreated 1.8 percent and Seoul's Kospi slid 1.5 percent.

"President Donald Trump's unwillingness to back down became apparent this morning, once again sinking markets into a risk-off atmosphere,' Jingyi Pan of IG said in a report. Pan said market attention turned to China for "signs of further retaliation.'

Contributing: The Associated Press; John Fritze, USA TODAY

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