Wall Street should be ready for China to be hit by more tariffs: Cramer

CNBC's Jim Cramer said on Tuesday that investors should be ready for the United States to impose a new set of tariffs on imports from China.

A tweet from President Donald Trump denouncing the country earlier in the day has confused Wall Street, explained the "Mad Money" host, dropping the Dow Jones Industrial Average by more than 23 points and dropping the 0, 25% of the S & P 500 and Nasdaq Composite.

The market would have finished much lower during the session without the optimism that the Federal Reserve will reduce its interest rates on Wednesday, he said.

"If the trade war with China intensifies again, we will need these rate cuts," Cramer said. "Narguer is not a trade policy, but it looks like we are about to get a new set of tariffs."

The United States has been engaged in a trade war with China since last year and both countries have imposed tariffs on billions of dollars worth of goods. Trade officials are in China this week to try to make progress on a trade deal, but Cramer fears a series of Trump tweets – which contain messages like[the Chinese] always change the agreement in the end to their advantage "and" we have all the cards in hand "- could frustrate these efforts and lead to new customs duties on Chinese exports, worth $ 320 billion dollars.

"Believe me … I'm very sympathetic to the president's arguments about China: I'm in favor, he's not wrong," Cramer said. "But just because something is true, it does not mean you should send it to the world by tweet … I found the timing awful."

Apple would not be able to replicate the strong quarter announced after the market closed on Tuesday if more taxes came into effect, Cramer said. While iPhone sales fell by 12% over the previous year, service revenues grew 13% over the period. The stock climbed 4% after trading hours.

Industrial companies such as the engine maker Cummins, which had to cope with weak demand in China during its last quarter, should also face more pressure, added the host.

National companies that could benefit from an interest rate cut, such as D.R. Horton or Trex, would make some of the best investments here, said Cramer.

Wall Street will be listening to hear what the Fed will say about monetary policy on Wednesday. Cramer, along with many other badysts, expects a quarter-point rate cut to support economic expansion.

"Thank God [Fed Chair] Jay Powell has our back, because the President is too busy stabbing his own Treasury Secretary in the back to accomplish something positive, "said Cramer.

Disclosure: The Cramer Charitable Trust holds shares in Apple.