Stocks in the United States moved sharply lower on Friday as President Donald Trump said he was ordering companies to look at how to close their operations in China and make more products at home.
Later in the day Trump said on Twitter that – starting on October 1 – the 25-percent tariffs on $250bn worth of Chinese goods will rise to 30 percent. Additionally, tariffs on the remaining $300bn in goods, due to begin on September 1, will now be set at 15 percent, rather than 10 percent.
The rhetorical strikes at Beijing came as trade tensions mounted, and as Trump faulted US Federal Reserve Chair Jerome Powell for not cutting interest rates aggressively enough.
The president called Powell an “enemy” in response to the central banker’s remarks on Friday morning – comments that had partially blamed global economic weakness on the trade war with China.
The US dollar rose sharply against the Chinese yuan, US equity markets fell and oil prices dropped on Trump’s latest social media salvo against China.
The S&P 500 went down 2.6 percent for the day. The Dow Jones Industrial Average lost 623 points, or 2.4 percent, to 25,629. The Nasdaq dropped three percent.
Technology companies, which have much to lose in the trade battle, accounted for the biggest share of the market’s losses. Chipmaker Nvidia slid 5.3 percent and Apple lost over four percent.
Trump cannot legally compel US companies to abandon China immediately, and he gave no details on how he might proceed with any such order.
“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,” Trump wrote on Twitter.
“We don’t need China and, frankly, would be far better off without them.”