U.S. stocks are battered in one of their worst days of 2018 as U.S.-China trade deal appears to sputter
Trump called himself a “tariff man” in a series of tweets Tuesday, re-igniting fears that he will move forward with additional tariffs on China
The economic agreement President Trump said he reached with Chinese leader Xi Jinping on Saturday showed signs of unraveling Tuesday, with the White House threatening new penalties against Beijing and multiple officials seeking to downplay expectations for an eventual deal.
Investors, who had applauded the deal on Monday, turned sharply negative Tuesday. The Dow Jones industrial average dropped 799 points, or 3.1 percent, to close at 25,027. The Standard and Poor’s 500-stock index fell 3.2 percent, and the tech-heavy Nasdaq gave up 3.8 percent.
Trump, in a series of Twitter posts, threatened to slap a range of import penalties on Chinese products if they did not make major changes in their economic relationship with the United States.
“President Xi and I want this deal to happen, and it probably will,” Trump wrote. “But if not remember, I am a Tariff man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power.”
This is a much different characterization of the China talks than just three days ago, when Trump had dinner with China’s president at a meeting of the Group of 20. After the dinner, Trump said they reached the framework of a deal that would come together in 90 days.
“It’s an incredible deal,” Trump told reporters after the dinner. “It goes down, certainly, if it happens, it goes down as one of the largest deals ever made.”
He later said China had committed to buying large amounts of U.S. agricultural products and completely removing all tariffs on U.S. automobiles, a huge shift from its current 40 percent penalty. Chinese officials, meanwhile, did not confirm any of these details. They wouldn’t even acknowledge that there was a 90-day deadline under which they were operating.
In the past 24 hours, there were signs that White House officials were beginning to backpedal from some of their initial optimism. In his Twitter posts on Tuesday, Trump said they might need an extension if the 90-day timeline didn’t prove sufficient.
Meanwhile, White House National Economic Council Director Larry Kudlow said there wasn’t an actual agreement for China to remove auto tariffs, but that he expected China to eventually do it as a measure of good faith.
He also said that China’s vice premier, Liu He, had told him there would be changes made “immediately” to show the Chinese were serious about a new agreement. But Kudlow acknowledged Tuesday that so far they haven’t seen any evidence of concrete steps being taken.
“I have no assurances” China will change, Kudlow said, speaking at an event hosted by the Wall Street Journal. He acknowledged that Chinese leaders have stopped short of following through on deals in the past, but he said he believed the involvement of Xi in the discussions Saturday would lead to a different outcome.
“It looks to me that the ball is being moved in the right direction,” Kudlow said.