Stocks open higher as rattled investors eye possible trade war after Trump move to impose tariffs on China – USA TODAY

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President Trump took the first step in imposing tariffs on as much as $60 billion worth of Chinese imports. The order is aimed at punishing Beijing for allegedly stealing American technology. (March 22) AP

A day after the Dow plunged more than 700 points, an escalating trade fight between the U.S. and China will be Wall Street’s focus on Friday.

In late morning trading, the Dow Jones industrial average was moving to the upside, with a gain of 120 points, or 0.5%.

The Dow entered the day in danger of falling back into so-called “correction” territory, or a 10%-plus drop from its high. After Thursday’s rout, the blue-chip stock index was 9.99% below its Jan. 26 all-time high of  26,616.71. The broader Standard & Poor’s 500 stock gauge is 8% below its peak.

The trade-fueled sell-off spread around the globe, with shares of Japan’s main stock index tumbling 4.5% and stocks in Hong Kong falling 2.5%. Stocks were also lower in Europe, with a broad index that tracks eurozone shares declining about 1%.

Driving the tumult in global markets was President Trump’s decision to follow through on his threats to slap tens of billions in tariffs on Chinese imports to the U.S., a move that prompted Beijing to retaliate and announce plans to impose tariffs on many American-made goods, including fruits, nuts and wine, entering China.

The tit-for-tat trade skirmish has raised worries that this confrontation between the two economic powers is more than just a negotiating ploy and could morph into a more serious full-blown trade war.

“Trump’s tariff plans have created uncertainty and put global stock markets under pressure,” says Nigel Green, founder and CEO of deVere Group, a U.K.-based investment firm.

More: Economic protectionism: Why a trade war could dent your 401(k) plan

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More: Dow tumbles more than 700 points as trade war fears intensify

Trade wars are bad for the global economy, as they cause prices that shoppers and businesses pay for goods and services to rise. A rise in inflationary pressures could prompt the U.S. central bank to speed up its pace of interest rate hikes, which could slow economic growth. Trade skirmishes can also hurt U.S. exports and corporate earnings.

“Markets are on a knife-edge, fearing a trade war,” says Peter Rosenstreich of   Swissquote Bank, Switzerland’s leading online bank. “China is unlikely to sit idly in response to Trump’s bluster.”

However, Rosentreich adds, markets could be “overreacting” to Trump’s threats to start a trade war. The heated rhetoric from the president could be more of a negotiating tactic.

“Trump is using the issue for political gain, rather than actual trade repositioning,” he says.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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