US stock indexes tumble as Trump threatens higher China tariffs

Investing.com -- U.S. stock indexes plunged Friday as President Donald Trump threatened to impose higher tariffs on Chinese goods, with major indexes accelerating losses throughout the trading day.

The S&P 500 declined 1.8% and the Nasdaq 100 fell 2.4% by 2 p.m., significantly extending earlier losses of around 1% following Trump’s statements on his Truth Social platform.

Trump said he would be "forced to financially counter" what he described as China’s hostile trade moves. "One of the Policies that we are calculating at this moment is a massive increase of Tariffs on Chinese products coming into the United States of America," Trump wrote.

The president’s comments came in response to what he characterized as letters from China to countries worldwide threatening export controls on rare earth elements and other materials. He claimed China was attempting to "hold the World captive" through monopolistic control of critical resources.

"They are becoming very hostile, and sending letters to Countries throughout the World, that they want to impose Export Controls on each and every element of production having to do with Rare Earths, and virtually anything else they can think of," Trump stated in his post.

Trump also canceled plans to meet with Chinese President Xi Jinping at the upcoming APEC summit in South Korea, saying "there seems to be no reason to do so" following these developments.

"I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so," Trump wrote.

The sharp selloff disrupted a relatively quiet week for markets, which had been grinding higher on hopes of dovish monetary policy and were trading near record highs. The flare-up brought trade concerns back to the forefront after stocks plunged earlier this year, only to recover and run to new highs.

With market valuations now stretched, investors appear concerned about renewed trade tensions between the world’s two largest economies and the potential impact on global supply chains, particularly in technology and manufacturing sectors that rely heavily on Chinese components or materials.

The timing of Trump’s announcement coincided with what he referred to as "PEACE IN THE MIDDLE EAST," suggesting the Chinese actions might have been deliberately timed to overshadow positive diplomatic developments elsewhere.