China led a regional stock market tumble, with its market falling nearly 2 percent, after the Trump administration threatened to impose new tariffs on Chinese goods. Stocks in Japan and South Korea also fell, although by less.
China’s currency was also hit by selling. China keeps a tight grip on the value of its currency, but the small amount that is traded outside of its borders — the so-called offshore renminbi — weakened against the dollar.
The intensifying trade war adds to China’s challenges, including signs that its effort to tame its debt problems could slow economic growth. Investors have turned skittish as a result. China has entered bear market territory — when prices drop by more than 20 percent from a peak — with its market hovering at levels not seen since a rout three years ago set off a domino effect in global trading.
The Trump administration on Tuesday night promised to impose tariffs on an additional $200 billion of Chinese products, including chemicals, handbags, petroleum and fish. That move came just days after the United States started levies on $34 billion worth of Chinese goods like robotics, ball bearings and even airplane parts.
The Chinese government pledged Wednesday that it would take unspecified countermeasures. It has matched previous tariffs dollar for dollar, leading some investors to worry that trade could get costlier still.
David French, an executive at the National Retail Federation, called the latest round of tariffs by the Trump administration a “reckless strategy that will boomerang back to harm U.S. families and workers.”
“The threat to the U.S. economy is less about a question of ‘if’ and more about ‘when’ and ‘how bad,'” French said in an emailed statement.
China’s main stock index was down 1.9 percent midday Wednesday. In the eastern city of Shenzhen, where many new technology and smaller companies are traded, the market was down more than 2 percent by midday. In Hong Kong, an index of China’s biggest companies listed there was down 1.7 percent.
Reaction was more reserved in other Asian markets. In Tokyo, the main index fell 1.1 percent. Stocks in Seoul fell less than 1 percent.
In the United States, S&P 500 futures were down 0.6 percent, while Dow Jones futures fell 0.6 percent.
This article originally appeared in The New York Times.
ALEXANDRA STEVENSON © 2018 The New York Times