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Dow Futures Drop over 500 points after Trump Threatens on China Trade

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“Tariff-Man” talks tuff when traders expect cream puffs

Photo / Adobe Stock – Lynxotic

Nasdaq futures down over 2%

Futures began to tumble when Trump announced he would raise tariffs on $200 Billion in Chinese goods and soon add a levy on $325 billion more. In the largest drop in Futures since January, traders appear to be reacting to the expectation of a positive resolution to the trade tensions, only to be surprised by the escalation by Trump.

Read More: The Dow Drops more than 6% as “Trump Bump” Vanishes into Thin Air

Brinksmanship? Or will both sides make good on threats?

As reported by the Wall Street Journal, China may be pulling out of the talks, which only raises the stakes. It’s entirely possible that both sides are talking tough in an attempt to gain an advantage and claim victory, if and when the talks resume. A sudden positive, “unexpected” reversal on both sides would likely spur a knee jerk market rally, for example, so volatility in the markets appears to be likely for the week ahead.

Needless to say, a trade war escalation would be a serious event for both sides. Although China may feel the negative effects of such an all out Tariff avalanche first, the potential downside for the U.S.A. is not clear and would be by no means insignificant.

Photo / South China Morning Post

With both sides broadcasting extreme positions, on the other hand, the talks may well halt, which would “require” Trump to make good on his threats (in order to save face). Stay Tuned.

Read More: Five New Books about how We can Change the Direction of the USA in November and Beyond


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