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Amidst escalating trade tensions, Chinese officials have reacted sharply to the recently increased U.S. tariffs, labeling them “a joke.” This statement comes as China raises its tariffs on American imports to 125%, a move that has left investors on edge.
In the early hours of trading on Wall Street, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite showed volatility, fluctuating between minor losses and gains in response to the latest developments in the ongoing trade skirmish between the U.S. and China.
A spokesperson for China’s finance ministry criticized the U.S. tariffs, characterizing them as a “numbers game” lacking genuine economic significance and emphasizing that such actions would be trivialized in economic history. The official warned, however, that China would decisively counter any attempts by the U.S. to infringe upon its interests.
These new tariffs mirror the 125% duties on Chinese exports announced earlier in the week by President Trump, with some products potentially facing increased tariffs of up to 145%.
Market analysts, like John Higgins of Capital Economics, noted that China’s retaliatory measures have further pressured both equities and the dollar, alongside ongoing adjustments in the bond market amid expectations of monetary policy easing and signs of economic strain.
Following the announcement of China’s tariff increase, gold prices surged over 2% to reach $3,250 per ounce, reflecting a trend towards safe-haven investments among jittery investors.
The S&P 500 has experienced a significant downturn, currently nearly 14% lower than its peak on February 19, while the Dow and Nasdaq have also seen declines of 11% and 18%, respectively. These drops underscore investor apprehensions regarding the potential effects of wide-reaching tariffs on corporate profitability and the general economy, prompting some analysts to heighten recession forecasts.
Despite the turbulent landscape, there have been some positive market movements. The Dow gained nearly 3,000 points in a single day earlier this week, with the S&P 500 and Nasdaq recording their most substantial daily gains in years after the Trump administration momentarily suspended “reciprocal” tariffs on various countries, excluding China.
Moreover, inflation rates in March were lower than anticipated, and indications suggest that the job market continues to perform robustly. Nevertheless, the sustainability of this positive sentiment remains uncertain, especially as tariffs exert upward pressure on consumer costs.
Americans’ concerns seem palpable, as new data from the University of Michigan reveals a notable decline in consumer confidence, hitting its lowest level since the pandemic’s peak. The survey indicated widespread apprehension about rising unemployment across various demographics and political affiliations, according to Joanne Hsu, director of the survey.
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