Wall St. Follows Global Markets Lower as U.S.-China Trade Dispute Escalates

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Investors moved their money into haven assets on fears that worsening ties between the world’s two biggest economies would affect global growth.CreditToshifumi Kitamura/Agence France-Presse — Getty Images

By Prashant S. Rao and Matt Phillips

June 19, 2018

LONDON — Stocks on Wall Street fell on Tuesday, joining a global sell-off that came amid an escalating trade dispute between the United States and China, the world’s two biggest economies.

The benchmark Dow Jones index, the Standard & Poor’s 500-stock index and the tech-heavy Nasdaq composite all fell in early trading, as investors worried about what the worsening battle over trade could mean for global growth.

Earlier in Europe, stock markets in Frankfurt, London and Paris were all down, while shares in Hong Kong, Tokyo and mainland China closed sharply lower. Investors moved their money into haven assets like 10-year United States Treasury bonds, and the Japanese yen.

“Markets are in a risk-off mode following the new U.S. tariff threat,” analysts at Deutsche Bank said in a note to clients on Tuesday.

In the latest sign of worsening trade ties, President Trump said on Monday that his administration was prepared to impose tariffs on a further $200 billion of Chinese goods, and warned of more penalties if Beijing fought back. In all, the White House is threatening to impose trade restrictions on as much as $450 billion of imports from China, a figure that is nearly equivalent to the total value of goods that China sold to the United States last year.

Beijing has said it would place its own tariffs on $50 billion worth of American goods. On Tuesday, a spokesman for the Chinese Foreign Ministry, Geng Shuang, said that the United States was “abandoning all the consensus that has been achieved, changing its mind constantly.”

Washington was “harming China and its people’s interests and also the world’s interests,” Mr. Geng said in a briefing with reporters. “China does not want a trade war, but also is not afraid of a trade war.”

The dispute — part of an intensifying protectionist drive by the Trump administration that has also targeted allies like Canada, Mexico and the European Union — has already disrupted global trade. There are also fears that it could have a negative impact on the world economy which, until recently, had shown strong growth.

“Most damaging for businesses and investment,” analysts at the Swiss bank UBS said in a report on Tuesday, “is perhaps rising uncertainty caused by lasting trade disputes, which could delay or significantly change business and investment decisions.”

Follow Prashant S. Rao on Twitter: @prashantrao.

Elsie Chen contributed research from Beijing.