US stocks on Wednesday buckled in for a wild ride as China threatened to retaliate with an 84% levy after President Trump’s 104% tax on the nation took effect.
Futures tied to the Dow Jones Industrial Average lost 442 points, or 1.2%, after losing 5,000 points over a week-long rout as investors panicked that Trump’s so-called “reciprocal” tariffs could reheat inflation and even trigger a recession.
S&P 500 futures dropped 0.7% and Nasdaq 100 futures fell 0.2% on Wednesday after Trump’s 104% tariff on China took hold.
The staggering figure threatens to raise prices across China-reliant supply chains in several industries, analysts warned.
China on Wednesday vowed to add 50% to its tariff on the US, totaling an 84% tax set to take effect Thursday.
The hefty tariff could cripple major companies at home that boast of “Made in the USA” products and send costs soaring along US supply chains.
But investors are holding out hope for smooth-sailing trade talks that could deliver lower tariff rates.
“Markets are telling us there are buyers waiting in the wings for the faintest whiff of constructive news on tariffs, as we have seen in this week’s intraday movements,” Carol Schleif, chief market strategist at BMO Private Wealth, said in a note.
“While valuations have been reset, investors can’t tell if they’ve reset to the right levels. There’s no recent playbook to operate from – President Trump has invented a whole new game and the players (investors) have not been provided a playbook,” Schleif continued.
On Tuesday, a brief morning rally saw the Dow jump by more than 1,400 points following reports of negotiations with foreign nations including South Korea, Japan, Indonesia and Vietnam.
Those gains were completely wiped out by the afternoon, however, after the White House revealed its plans to raise the tariffs on China for a third time this year, with the Dow closing 320 points lower.
