US Futures Plunge After Trump Calls For $200 Billion More Tariffs On China

Just minutes after the US Senate passed its ZTE-Deal-killing amended-bill, President Trump hit China with a potential double whammy as he directed the U.S. Trade Representative to identify $200 billion worth of China goods for additional 10% tariffs.

“Further action must be taken to encourage China to change its unfair practices, open its market to United States goods and accept a more balanced trade relationship with the United States,” Trump said in a statement.

US Equity markets tumbled on the headlines erasing the day’s exuberance rebound…

At the same time, China’s offshore Yuan broke below its 200DMA…

The Dollar Index is down very modestly but 10y TSY yields dropped 2bps to 2.89%…

Further warning China that after these new measures are in place – on top of existing tariffs on USD 50 billion in Chinese imports –  punitive measures on another USD 200 billion of Chinese goods would go forward “if China increases its tariffs yet again.”

“These tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced.“

Anyone who now claims that this is not a ‘trade war’ is kidding themselves – this is Trump’s retaliatory trade tariffs due to China’s retaliatory trade tariffs which were due to Trump’s trade tariffs which he imposed due to China’s non-fair trade.

As an ominous reminder,  Goldman recently warned  that…

 “it is unlikely that the White House can convince trading partners that tariff threats are credible without also convincing financial markets.”

In other words, for Trump’s trade negotiations to be successful, and for US trade partners to take a flip-flopping Trump credibly, the market has to crash.