The Dow Jones Industrial Average fell 300 points Friday morning after President Donald Trump’s threat to more than double tariffs on $200 billion of Chinese imports went into effect.
The S&P 500 fell by 1.4 percent by mid-morning Friday, with the Nasdaq down 1.7 percent, after the U.S. slapped a 25 percent tariff on more than 5,700 categories of goods shipped out of China as of 12:01 a.m. Friday morning.
The extended market sell-off continues a volatile week on Wall Street as investors measured the likelihood of a resolution to months of trade negotiations between the world's two largest economies.
Dow futures had been flat overnight after the midnight deadline passed for the two sides to salvage the deal, but sank 150 points early Friday after President Donald Trump tweeted "There is absolutely no need to rush" the trade talks now that tariffs are "being paid to the United States by China."
Despite the president's assertions that China will absorb the cost of the tariffs, it is American consumers and manufacturers who will shoulder the burden, in the form of higher prices paid for consumer goods.
While Americans won't see any direct impact on their wallet right away, that situation will change over the next three months, when manufacturers and retailers will receive and reprice containers of goods that are not currently in transit. Cargo that is already seaborne won't be taxed at the higher rate unless it arrives after June 1, U.S. Customs and Border Protection said.
The Chinese Commerce Ministry said Thursday it "hopes the United States can meet China halfway, make joint efforts, and resolve the issue through cooperation and consultation."
Negotiations to overcome the impasse continued Friday morning between China's top trade negotiators, China's Vice Premier Liu He, and the American team, led by U.S. Trade Representative Robert Lighthizer.
The ratcheting up of trade tensions has left businesses, investors, and policymakers across the world concerned about the negative impacts on an already slowing global economy.