Stocks traded sharply lower Friday after President Donald Trump unexpectedly announced plans to impose tariffs on imports from Mexico in an attempt to pressure the country to stem the flow of migrants across the U.S. border.
Meanwhile, reports said China may be readying fresh retaliatory moves against the U.S. in that trade dispute, while data showed a contraction in Chinese manufacturing activity this month.
How are major benchmarks faring?
The Dow Jones Industrial Average DJIA, -1.06% fell dropped 291.05 points, or 1.2%, to 24,878.83. The S&P 500 index SPX, -1.00% was off 32.56 points, or 1.2%, to 2,756.30, while the Nasdaq Composite Index COMP, -1.01% dropped 96.63 points to 7,471.09, a 1.3% decline.
What’s driving the market?
Late Thursday, just as Asian markets began trading, Trump announced in a tweet that the U.S. would impose a 5% tariff on all goods from Mexico until that country stops the flow of illegal immigrants into the country. He said the tariffs will rise to 10% on July 1 if the crisis persists, and by another 5% for every successive month, up to 25% by Oct. 1.
“Tariffs will permanently remain at the 25% level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory,” Trump said. Earlier Thursday, the White House administration triggered the process for submitting a bill to Congress that would implement the new the U.S.-Mexico-Canada Agreement, the successor to the North American Free Trade Agreement.
Stock futures fell on the Mexico news, then dropped lower during early European trading after a tweet from Hu Xijin, the widely followed editor of the Global Times, a Chinese state-owned tabloid that’s watched for clues to government policy stances, indicated that China will hit back hard. “Based on what I know, China will take major retaliative measures against