US stock markets were down more than 2% after China announced retaliatory tariffs on US goods. Earlier, stocks also fell in Europe and Asia as the US-China trade war escalated.
Image: Getty Images/D. Angerer
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Global stock markets had their worst day in months on Monday as an escalating trade war between the United States and China rattled investors.
The S&P 500 slumped 2.4%, the Dow Jones Industrial Average dropped 2.38% and the technology-heavy Nasdaq closed down 3.41% after China said it would impose retaliatory tariffs on US goods.
The pan-European STOXX 600 index lost 1.21%, while the MSCI's global equity index fell 1.9% to reach a two-month low.
Trump had warned Beijing not to retaliate, but on Monday said he would meet with Chinese President Xi Jinping for what he expected would be "very fruitful" talks next month at the G20 in Japan.
Trump's tariffs and who they target
US President Donald Trump has repeatedly boasted that the tariffs he has imposed on trading partners are a financial windfall but, research shows it is Americans who bear the brunt of the impact. DW has an overview.
Image: picture-alliance/newscom/B. Greenblatt
Solar panels and washing machines
The first round of tariffs in 2018 were on all imported washing machines and solar panels — not just those from China. A study by economists from the Federal Reserve Bank of
New York, Columbia University, and Princeton University found that the burden of Trump's tariffs — including taxes on steel, aluminum, solar panels falls entirely on US consumers and businesses who buy imported products.
On Friday May 10, 2019 President Donald Trump imposed sanctions on $200 billion (€178 billion) worth of Chinese goods. The move raised tariffs from 10% to 25% on a range of consumer products, including cell phones, computers and toys. China's Commerce Ministry said it "deeply regrets" the US decision.
Image: Getty Images/AFP/STR
Issues with the EU
In April 2019, the United States said it wanted to put tariffs on $11.2 billion worth of goods from the EU. The list includes helicopters and aircraft from Airbus as well as European exports like famous cheeses such as Stilton, Roquefort and Gouda, wines and oysters, ceramics, knives and pajamas.
Image: Imago/Ralph Peters
EU fights back
The EU imposed import duties of 25% on a $2.8 billion range of imports from the United States in retaliation for US tariffs on European steel and aluminum. Targeted US products include Harley-Davidson motorcycles, bourbon, peanuts, blue jeans, steel and aluminum.
Image: Getty Images/AFP/M. Ralston
European automakers next?
May 17, 2019 is the deadline for President Trump to decide on imposing tariffs on vehicle imports from the EU. According to diplomats, Germany, whose exports of cars and parts to the United States are more than half the EU total, wants to press ahead with talks to ward off tariffs on automakers Volkswagen, Mercedes and BMW.
Image: picture alliance/dpa
India not exempt
India, the world's biggest buyer of US almonds, on June 21, 2018 raised import duties on the nuts by 20% and increased tariffs on a range of other farm products and US iron and steel, in retaliation for US tariffs on Indian steel. Trump said last month that he would end preferential trade treatment for India, which would result in US tariffs on up to $5.6 billion of imports from India.
Image: Getty Images/AFP/R. Schmidt
North American neighbors in tariff spat
Mexico on June 5, 2018 imposed tariffs of up to 25% on American steel, pork, cheese, apples, potatoes and bourbon, in retaliation for US tariffs on Mexican metals. While to the north, Canada on July 1 imposed tariffs on $12.6 billion worth of U.S. goods, including steel, aluminum, coffee, ketchup and bourbon whiskey in retaliation for US tariffs on Canadian steel and aluminum.
Image: Edgard Garrido/REUTERS
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Investors pare back gains, pile into safe havens
Investors had anticipated a US-China trade deal before talks collapsed last week, sending major indexes on Wall Street up since the start of the year. The S&P 500 is up 12.2% since January, the Dow is up 8.6% and the Nasdaq is up 15.2%.
"The market has been looking around for an excuse to correct. We were straight up from Christmas," Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, told the Reuters news agency. "We now have an excuse to have a correction."
Technology and industrial companies, which are exposed to China and would suffer in an extended trade battle, bore the brunt of Monday's sell-off.
The Chinese yuan also weakened to its lowest level against the greenback since December 24.
Investors piled into safe-haven assets, including US Treasuries and the Japanese yen.
The 10-year Treasury yield dropped to 2.4%, falling below three-month bills, the second time in under a week the yield curve has inverted. A yield inversion — when shorter-dated yields are higher than longer-dated yields — has historically been a warning sign of a recession.
