Trade war talk up, stocks close down
The United States and China edged closer yesterday to triggering the riskiest trade war in decades, a fight that could weaken the world’s two largest economies, unsettle relations between Beijing and Washington and crimp global growth.
The collateral damage could be widespread.
If the tariffs the two countries have threatened to slap on each other’s exports take effect, their consumers would have to pay higher retail prices. Companies would pay more for imported parts and would have to decide whether to absorb those higher costs — or pass them on to their customers.
American farmers could be evicted from a lucrative market for their goods. U.S. companies, from Caterpillar to Qualcomm, would likely face obstruction from regulators in China, a market they rely on for an outsize share of sales.
The standoff, mostly over China’s sharp-elbowed drive to supplant U.S. technological dominance, threatens to tip “the U.S. and China into a downward spiral like the world hasn’t seen since the trade war that plunged us deeper in in the Great Depression and into the Second World War,” warned Matt Gold, professor of international trade law at the Fordham Law School and a former U.S. trade official.
World financial markets buckled after President Trump ratcheted up the tensions by proposing a fresh batch of tariffs on Chinese products. With concerns growing on Wall Street, the Dow Jones industrial average closed down nearly 300 points — more than 1 percent — on its sixth straight losing day. Stocks tumbled nearly 3 percent in Hong Kong, 2 percent in Tokyo and 4 percent in Shanghai.