US stock markets tumble as trade war with China escalates

US President Donald Trump (Photo: Associated Press)

All three US stock market indexes fell dramatically today on news that China will be imposing further tariffs on American products.

The Dow Jones Index closed at 623 points lower registering a 2.4 percent decline while the S&P 500 finished 2.6 percent lower. The Nasdaq Composite dropped even further closing 3% down.

The fall-off comes on the back of news that China will be placing tariffs on US$75 billion worth of US goods in retaliation for the Trump administration’s decision to place a 10% tariff on US$300 billion worth of Chinese products.

Many Jamaicans and people across the Caribbean invest in the US stock market and this trade standoff between the world’s two largest super powers could impact their investment portfolios.

Floor traders at the New York Stock Exchange, NYSE (Photo: Yahoo! Finance)

In response to the news from China, President Trump said: “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.”

“I will be responding to China’s tariffs,” Trump warned.

Many analysts and companies fear that Trump will now look to raise tariffs on Chinese goods from 10% to 25%.

“In our view, 25% tariffs would cause considerable economic damage and greatly increase the probability of a U.S. recession in 2020,” said Senior Economist at UBS Global Wealth Management, Brian Rose.

So how will this affect us here in Jamaica?

Vice President, Wealth at NCB Capital Markets Lamar Harris

Vice President of Wealth at NCB Capital Markets, Lamar Harris speaking with BUZZ said: “ There is a lot of uncertainty right now in US markets caused in the main by an upcoming presidential election and trade wars, particularly with China. This volatility we are seeing provides an opportunity for investors including Jamaicans.”

“Jamaica’s economy is growing and so too is our stock market. We are not embroiled in trade wars and so should not be too concerned. We remain strong,” Harris added.