Trade war with China wipes £1.8trillion off US stocks in 68 days

A PUNISHINg £1.8trillion has been wiped off the value of America’s leading companies in recent weeks amid mounting fears of a full-blown trade war between the US and China.

The two main benchmarks on Wall Street – the Dow Jones Industrial Average and S&P 500 – have fallen more than 8pc since peaking on January 26.

Shares in New York opened sharply lower again yesterday as China threatened to slap punitive tariffs of 25pc on imports of 106 American goods, including soybeans, cars and planes.

Aircraft maker Boeing was among the worst-hit, falling nearly 6pc in early trading, before a recovery in the wider market.

The threat of an all- out trade war between the world’s two biggest economies has spooked investors already fretting about higher interest rates and a backlash against technology giants.

Facebook was particularly hard hit after revelations that the data of around 50m users has been harvested by other companies.

The American stock market has soared since the election of Donald Trump, with banks, tech stocks and manufacturers such as Boeing hitting record highs.

But it is now feared that the socalled ‘Trump bump’ has run its course. In London, the FTSE 100 index is also down nearly 10pc since its peak in early January, costing investors and savers with money tied up in the stock market through Isas, pensions and other holdings nearly £200bn.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: ‘2018 has not been a kind year for stock markets so far, despite a promising start. The US in particular has been hit by a triple whammy of Trumponomics, the Facebook scandal and concerns over rising interest rates. However it’s important to keep some perspective. In the short run markets are unpredictable, febrile beasts, but in the long-term they are a more reliable source of healthy investment returns.’

Beijing’s threat to impose tariffs on 106 American goods entering China came just hours after Trump outlined plans to increase levies on 1,333 Chinese products shipped into the US.

China’s proposals strike at signature US exports including soybeans, frozen beef, cotton and other key agricultural commodities produced in states from Iowa to Texas that voted for Trump in the 2016 presidential election.

Other goods that look set to face added tariffs include Tesla electric cars, Boeing aircraft and Jack Daniels whiskey.

Naseem Aslam, chief market analyst at Think Markets, said: ‘China has taken out big guns to answer Trump’s tariff. The trade war is here.’

Christine McDaniel, a senior research fellow at the Mercatus Center at george Mason University in the US, warned there would be no winners.

She said: ‘The United States loses, China loses, and the world loses from the two largest economies imposing taxes on imports and disrupting global value chains and world markets.’

Barclays boss Jes Staley urged the US and China to step back.

‘I would really hope there would not be a trade war,’ he said. ‘I have to believe that the powers that be will recognise the importance of having a global economy which is integrated.

‘The amount of trade that goes on around the world has grown at an extraordinary rate post-World War Two. That integration has led to economic prosperity around the world, and also political stability around the world.

‘I would hope that we understand how trade is one of the anchors to political stability, and so the jousting will remain a side issue and not expand beyond what we’re currently seeing.’