Apple, Intel, Cisco stocks tumble as Trump threatens new tariffs on China – California

0
19

Major tech stocks such as Apple, Intel and Cisco Systems went into the red Monday, with investors fleeing Wall Street after President Donald Trump threatened to slap massive new tariffs on Chinese goods if the world’s two largest economies can’t reach a new trade deal.

As trading progressed, the blue chip Dow Jones Industrial Average recouped some of its early losses, but remained down by 279 points, or 1 percent, at 26,226.12. Meanwhile, the tech-heavy Nasdaq Composite Index gave up 99 points, or 1.2 percent, to fall to 8,067.09. The broad-based Standard & Poor’s 500 Index was off by 31 points, or 1 percent, at 2,914.43.

The impetus for the declines was a series of tweets that Trump sent Sunday, in which he said he would increase tariffs on $200 billion worth of imported Chinese products from 10% to 25% if a trade deal is not reached by Friday.

“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” said Trump in one of his Sunday tweets.

Trump has argued that one of the reasons for putting new tariffs of Chinese products would be to retaliate against China for failing to crack down on the theft of intellectual property (IP) of U.S. tech companies.

“Resolving long-standing IP issues in China are a major focus of software and chip vendors as well as (Wall) Street, with ongoing negotiations helping shine a brighter spotlight on these IP issues,” said Dan Ives, managing director of Wedbush Securities.

Ives said because of the nature of the trade talks, many leading tech companies are “caught in the crossfire” of investors’ fears and Washington’s negotiating stance.

Among Bay Area tech leaders, Apple shares fell 1.7 percent, to $208.24; Intel slipped by almost 1 percent, to trade at $51 a share; Cisco Systems shares were off by 1.5 percent at $54.14; and Advanced Micro Devices fell by 3.2 percent, to $27.31 a share.

The United States and China have been negotiating a trade deal for months, and the countries had been in a state of peace for several weeks as talks continued and prepared to reach their conclusion this week. Several high-ranking Chinese officials, including Vice Premier Liu He, have been scheduled to come to the U.S. to finalize trade agreements, but the New York Times said that it was possible that Liu may cancel his visit.

In addition to threatening immediately raise tariffs on $200 billion of Chinese products on Friday, Trump also tweeted that he would impose a 25% tariff on another $325 billion of Chinese goods “shortly,” saying that those products currently “remain untaxed.”

Trump’s escalation of trade-war rhetoric came just a few days after the U.S. Labor Department delivered a report that highlighted the strong state of the American economy and workforce. This past Friday, the Labor Department said the nation’s unemployment rate had fallen to its lowest level since 1969.

“The President’s tweets imply he no longer believes the current tariffs have had a negative effect on the U.S. economy,” UBS analyst Robert Martin said in a research note Monday. “If the President follows through, this round of negotiations will likely break down and we would expect a new round of talks would be difficult to restart.”

But Martin also said that we have seen these kinds of actions before from Trump, and that such statements have usually turned out to be tactics before reaching final deals on trade and business agreements.

“We continue to assume that trade talks, by hook or crook, continue and that ultimately the two sides reach agreement,” he said.

LEAVE A REPLY

Please enter your comment!
Please enter your name here