Trump suggested to reporters in London that a trade deal with Beijing might come much later than many expected, saying “in some ways I think it’s better to wait for after the election if you want to know the truth.”
This contradicts Trump’s earlier statements about negotiations going well. But investors chose to focus on the downside risk, because a trade deal between the United States and China has been pretty much priced in ever since the two countries came to a preliminary verbal agreement in October. This agreement was never signed.
Other trade headlines are also spooking investors. For example, the United States proposed tariffs on French goods like cheese and champagne on Monday, in response to France’s digital tax aimed at Google (GOOGL) and Facebook (FB).
Meanwhile, President Trump threatened to slap tariffs on aluminum and steel imports from Brazil and Argentina given the “massive devaluation of their currencies.”
Amid all this, the Dow (INDU) opened more than 400 points, or 1.4%, lower. The index further extended its losses in the first minutes of trading. The S&P 500 (SPX) fell 1.3%, and the Nasdaq Composite (COMP) was off by 1.4%.
On Monday, the three indexes recorded their worst one-day percentage drop in two months.
Trade uncertainty is back with a vengeance.