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How Trump’s 102-Word Tweets Erased US$2 Trillion Off Global Stock Markets



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May 10 2019
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Stock markets across the world were flabbergasted by President Donald Trump’s tweets on Sunday. Known as the most powerful man on the planet, largely due to the U.S. military power, the post of the U.S. president has brought a new meaning under Trump administration. The U.S. president could easily bring down global stock markets from something called Twitter.

 

Below are the 102 words from Trump that created havoc in the global markets:

 

“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….”

 

“….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”

US-China Trade War - President Xi Jinping and President Donald Trump

Many were optimistic that the trade war between the United States and China was coming to an end – until Donald Trump launches the 102-word of tweets – wiping off nearly US$2 trillion in market value. Investors, caught off guard, scrambled to sell as the massive losses on stock markets spread like wildfire around the world. The volatility bounced back again.

 

According to Bloomberg, the CBOE Volatility Index – known as Wall Street’s “fear gauge” – rises 50% in two days to breach 20 for the first time since January. Some said Trump and his cronies or family members should be investigated if they had made truckloads of money trading on the insider news – that somehow they knew the president was going to those explosive tweets.

 

So far, a whopping US$1.93 trillion has been erased from global stocks. And it could get worse as the 12:01 ET Friday deadline passes without a deal. Yes, with immediate effect, the Trump administration is hiking duties on US$200 billion worth of Chinese products to 25% from 10%. Beijing promised “necessary countermeasures” this week if the U.S. raised tariffs.

US-China Trade War - Clashes

That means goods exported after May 10 will be affected by the latest 25% tariff hike. And if President Trump follows through with his threat, another 25% tariffs would be slapped on US$325 billion in Chinese goods that have not yet been taxed. So far, the U.S. has already imposed tariffs on US$250 billion total in Chinese products. Beijing has retaliated by putting duties on US$110 billion in U.S. goods.

 

After accusing China on Sunday of walking back on key parts of an agreement, Trump claimed on Wednesday that Beijing broke the deal – a statement that sent Asian and U.S. stocks tumbling on Thursday. The U.S. equity markets only recovered later in the day after Trump said a deal was still possible this week. Trump also said tariffs an “excellent” alternative to a trade deal.

 

Dow Jones Industrial Average futures have slipped more than 100 points before the Friday’s opening bell. Although Chinese Vice Premier Liu He is currently in Washington for trade negotiations, he arrived without the title of “special envoy” for Chinese President Xi Jinping, suggesting he may have stripped of authority to make concessions. That means a trade war is likely to continue.

Stock Market Collapse - Wall Street Trader Reaction

 

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