The trade war is just getting bigger. On Friday, China has announced retaliatory tariffs on some of the U.S. products.
China has raised import tariff on $75 billion worth of the U.S. goods by 5 to 10 percent. About 5,000 products will be affected by the tariffs.
The Dow Jones Industrial Average immediately reacted by sliding 129 points on market opening, which is down by 0.5 percent. The Nasdaq Composite fell by 0.6 percent, while the S&P 500 saw a fall of 0.4 percent. The U.S. auto sector was the most affected.
The U.S. President had imposed tariffs on Chinese imports worth $300 billion early this month. The tariffs were to take effect from September 1. Close to its heels is the tariffs announced by the Chinese government on Friday.
The $75 billion tariffs will be imposed in two batches. One will take effect on Sept. 1 and the next will be on Dec. 15, which coincides with the tariff dates announced by the U.S.
The retaliatory measure taken by China in raising tariffs on the U.S. goods is just an indication that it is not prepared for a trade agreement.
According to a statement by China, it says that the U.S. tariffs are leading to continuous escalation of friction in the Sino-U.S. relationship. It further states that this is a threat to the multilateral trading system and affects the principles of free trade.
The Nasdaq Composite was most affected by the tariffs, especially the technology sector. The U.S. markets which were anticipating positive news from the Fed chair Jerome Powell was trading in the green at pre-open, however, slid down after the announcement of the tariffs from China.
The inverted yield curve which is a sign of a recession is troubling the U.S. economy. On Thursday it inverted again, which is the third time in the last seven sessions of trade.