Beijing’s threats to retaliate against the United States caused a fall in major US stock indices. The further escalation of the trade conflict immediately affected the New York Stock Exchange. The Dow Jones index lost 695.21 points or 2.68 percent in one trading session and approached to 25,247.16 points. The S&P index, which includes 500 largest US companies, fell by 79.87 points or 2.77 percent and set at 2,801.53 points. The NASDAQ index went down by 247.36 points or 3.12 percent to 7,669.58 points. Such a steep plunge occurred due to China’s threats to increase tariffs on more than 5,000 American products worth about $60 billion. These duties will come into effect on June 1 unless the parties find a compromise.
China decided to raise tariffs in retaliation for a similar increase in fees by the US. The United States is no longer simply threatening but have really imposed high tariffs on Chinese exports. Since the beginning of the trade war, duties have been increased from 10 to 25 percent by $200 billion. Such radical measures were taken after Beijing had not included most of the US requirements in the draft trade agreement. China considered the statement of the American President Donald Trump about the need to lower the interest rate as a signal that the economy of the United States is actually less stable. So, Beijing decided to take a tougher stance in trade negotiations, and it was a huge mistake.