STOCKS TRADE FADE

China tariffs strike Dow

The Dow got slammed again on Friday, dropping more than 400 points on worries about a looming trade war with China.

After ducking in and out of positive territory, the Dow Jones industrial average tumbled in the late afternoon to close down 424.69 points, at 23,533.20.

The drop capped a two-day sell-off that left the blue-chip index more than 1,100 points lower, plunging the Dow to its lowest levels since November.

A plethora of headlines kept the markets skittish.

Early Friday, President Trump tweeted he was considering vetoing the omnibus spending bill before ultimately agreeing to sign it.

Also on Friday, China signaled that it may rethink its role as the largest foreign creditor to the US and might pare back its purchases of Treasurys in response to Trump’s plans to impose tariffs of $60 billion on Chinese imports.

When asked by Bloomberg if China would reduce purchases of Treasurys in response to a looming trade war, Cui Tiankai, China’s ambassador to the US, did not rule out the possibility.

“We are looking at all options,” Tiankai said in a televised interview Friday. “If a trade war is forced on us, we have to fight back.”

China holds $1.2 trillion in Treasurys, roughly 19 percent of the foreign holdings of US government securities, according to government data

China slowing purchases could enlarge a glut of Treasurys as the Federal Reserve unwinds its $4.4 trillion balance sheet. Tax cuts and the $1.3 trillion omnibus spending bill mean Treasury will need to sell more securities to keep the government running.

But for all the seeming bluster, Wall Street was skeptical about China’s threats.

“Much of the noise coming out of Washington and China is posturing,” Bruce Bittles, chief investment strategist at RW Baird, told The Post.

Bittles added that China likely doesn’t want to hurt its biggest market for manufactured goods.

China would also have trouble finding other safe havens to park their money cheaply.

“The US is still the de facto currency. It’s a place where China can keep its money and sleep well at night,” said Mona Mahajan of Allianz Global Investors.

“They don’t want to escalate this trade war,” she said, noting that China issued a “measured response” to place tariffs of only $3 billion of US imports after Trump said Thursday he was putting tariffs on about $60 billion of Chinese imports.