Over the weekend, Donald Trump ramped up claims that he’ll use tariffs to punish China.
The news could spur on panic selling.
The precarious position that the stock market is in means any negative catalyst could create a downward spiral.
There’s a lot of debate about whether the coronavirus pandemic will have a lasting impact on the U.S. stock market. Judging by April’s stellar returns, the bulls are winning that argument.
But with a slew of terrible economic data expected over the next few weeks, many wonder whether investors can continue looking past it. Rising unemployment and the prospect of a 40% decline in GDP hasn’t been enough to sink the stock market rally. But what about adding a trade war to the mix?
Trump Trade War
That seems to be Donald Trump’s plan after he slammed China over the weekend for allegedly covering up the origin of the coronavirus. Trump has warned that China would be held accountable for its actions. He even said that he’d consider punitive tariffs in response to the nation’s handling of its coronavirus outbreak:
We signed a trade deal where they’re supposed to buy, and they’ve been buying a lot, actually. But that now becomes secondary to what took place with the virus.The virus situation is just not acceptable
Trump’s rhetoric was cheered by his supporters, who have been speculating about China’s nefarious role in the coronavirus pandemic for months. On the other hand, traders collectively rolled their eyes. Here we go again.
Trade Talk Could Tank the Stock Market
Stock futures immediately started to tumble following Trump’s remarks. At the time of writing, Dow futures were down nearly 300 points.
This isn’t the market’s first experience with Trump’s trade war merry-go-round. In 2019 the market was dominated by volatility stemming from the president’s trade-war tweets.