Trade War Causes Dow to Take a Nose Dive

Last week, President Trump announced a new 10% tariff on about $300 billion of Chinese goods.  In retaliation, China announced they would suspend their purchases of US agricultural goods.  But the biggest kicker that caused the market to drop dramatically was the devaluation of the yuan.  China allowed their currency to fall below a key metric of the US dollar.

Both China and the US feel the latest jabs against each other during this trade war are “serious violations”.  This devaluation is a direct response to the tariffs though China has denied that they intentionally allowed their currency to drop to counter the tariffs.  They also deny halting the purchase of agricultural goods.  They are simply waiting to see how trade negotiations continue.  Halting of the agricultural purchases is the reason for Trump’s additional tariff, citing China’s failed promise of large purchases.  This will surely hurt our local farms in the Midwest.

All markets closed poorly with the Nasdaq falling consistently for 6 seasons, the longest losing streak since 2016.  The Dow dropped 767 points and fell for the 5th day in a row.  The S&P fell for its 6th day in a row, closing 3% under the previous day.  Today marks the worst day in the stock market of 2019 while having had its best day just last month.

As this trade war intensifies, US markets are falling, and our national farmers are affected.  Now with the latest tariff, and whatever retaliation Trump decides to enforce in response to China, consumers will feel the dent in their pocketbooks.