US stocks sold off on Friday as President Donald Trump threatened to revive the trade war with China. The S&P 500 saw its steepest loss since April.
In a post on Truth Social, the president said he believed China was “becoming very hostile” in trade talks, and that there now seemed like there was “no reason” to speak with China’s President Xi Jinping in South Korea as planned later this month.
The day was a painful reminder for investors that tariffs are still a threat to the market and the economy. Oil prices cratered in line with stocks, with brent and US crude prices down 4% on fears of weaker economic activity hitting energy demand. The 10-year Treasury yield dropped nine basis points to 4.05%.
Here’s where US indexes stood at the 4 p.m. closing bell on Friday:
“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 in a post on Truth Social, adding that there were “many other countermeasures” that were under “serious consideration” in the US.
Trump added that China’s desire to impose export controls on items like rare earth minerals would “clog” markets and “make life difficult for virtually every Country in the World.”
A finalized trade deal with China, one of the US’s largest trading partners, has been at the top of investors’ wish list after tariff anxieties sent markets plummeting earlier this year.
“President Trump is sparking risk-off sentiments in markets,” José Torres, a senior economist at Interactive Brokers, said in a note on Friday. “Investors are clamoring for safe havens as a heavy levy increase could weigh on corporate earnings and the economic outlook.”
“Trump’s actions against China this morning were the excuse the market needed to begin correcting,” Tom Bruni, the head of markets at Stocktwits, wrote in a note.
Stocks got a boost after Trump first reached a preliminary trade agreement with China in mid-May, which involved both nations lowering tariffs for a 90-day period that has since been extended. In the last extension, the US agreed to lower its tariff rate to 30% on goods from China, while China is levying a 10% tariff on US goods through November 10.