Dow plummets, Nasdaq falls more than 3% after rising tariffs in China

Inventories fell sharply on Monday after China announced that it would increase customs duties on US imports to $ 60 billion, up to 25% after the collapse of trade negotiations between the two largest economies worldwide.

China said the tariff increase on about 5,000 product groups would come into effect on June 1. The United States raised tariffs to 25 per cent on $ 200 billion of imports made by China.

"The recent escalation of trade tensions between the United States and China is putting increasing pressure on inventories, as rising retaliatory tariffs may trigger a large-scale trade war," said Alec Young, director of Global Market Research at FTSE Russell. "Investors worry more and more of an anticipated rebound in second – half profits that could evaporate as President Trump 's threat to weigh in on the remaining $ 325 billion of dollars. Chinese imports would disproportionately target consumer products such as iPhones, which would further threaten the consumer-driven US economy. "

President Donald Trump tweeted that China "will be very hard hit if you do not make a deal because companies will be forced to leave China for other countries." Too expensive to buy in China. a lot to do, almost done, and you backed away! "

White House economic adviser Larry Kudlow said on Sunday that Japanese President Xump Jinping and Chinese President Xi Jinping are likely to talk about the G20 summit in Japan next month. The Chinese ambassador invited US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing.

The Dow Jones Industrial Average was down 658 points, or 2.54%, to 25,284, the S & P 500 down 2.58% and the Nasdaq down 3.36%.

"Friday's rally, triggered by remarks by Treasury Secretary Mnuchin that the recent talks were" constructive ", was reversed this morning, when China's retaliatory tariffs were announced. 25% on goods worth $ 60 billion, "said Cliff Hodge, director of investments. for Cornerstone Wealth. "So, the sale has been orderly and eliminates some of the bullish equity markets.We are somewhat concerned about the action on the fixed income markets.The 3-month-10-year segment of the curve of the Against the backdrop, investors should closely monitor yields and the US dollar to find clues about the future direction of the market.If the DXY soars, the reflation trade orchestrated by the banks power plants will be threatened. "