By CCN.com: The Dow plummeted more than 600 points on Monday, and Wall Street quaked in terror at the sobering realization that the US-China trade war has suddenly resumed with a vengeance.
As the stock market careens lower, let’s agree on who’s to blame: US President Donald Trump.
The Dow Jones Industrial Average imploded when the markets opened on Monday, and by 12:49 pm ET the “Trump Dump” had wiped a staggering 620.05 points or 2.39% off the DJI. The index last traded at 25,322.32, with 29 of 30 index members suffering declines.
The Dow sell-off was headlined by Apple, whose stock plunged 5.29% after the Supreme Court ruled against it in a case related to an antitrust suit. Caterpillar followed closely behind with a 5.1% drop. Boeing – the DJI’s most heavily-weighted stock – fell 4.38%.
The S&P 500 slid 2.44% to 2,811.04, and the Nasdaq crashed 3.21% to 7,662.64.
The stock market’s vicious downturn directly followed the Chinese Finance Ministry’s announcement that it would hike tariffs on $60 billion worth of US goods as retaliation for the US increasing import duties on $200 billion worth of Chinese goods last Friday.
However, the true source of this bloodbath sits in the Oval Office, Twitter app in hand.
President Trump and his “plunge protection team” spent months pumping the stock market by relentlessly touting every inch of progress that the US and China allegedly made in their trade negotiations.
They had to know how perilous a devil’s bargain they were making by promising Wall Street a trade deal whose prospects were always in doubt. They knew who they were dealing with, and they nakedly pumped the stock market anyway. Now, it’s investors who are reaping the whirlwind.
No, Trump couldn’t have predicted that Beijing would suddenly alter the rules of the game at the 11th hour. But he’s still responsible for everything that transpired next.
Faced with a crippling dilemma about how to respond, Trump chose the hardline stance of reigniting trade war tensions. That may have been a shrewd strategy, but the president inexplicably refused to admit – as his top economist Larry Kudlow did on Sunday – that this ruthless war of attrition would create economic casualties in the US as well as China.
Admitted golf junkie Trump further teed the Dow up for collapse by trumpeting the narrative that, despite all evidence to the contrary, there was a “very strong” chance that the US and China would strike a deal – or at least a ceasefire – before those tariffs took effect on May 10.
Even now, as China smacks the US with retaliatory tariffs and the stock market suffers a vicious freefall, Trump continues to bury his head in the sand.
This morning, he iced his proverbial cake with the dubious – and downright deceptive – allegation that there is “no reason for the U.S. Consumer to pay the Tariffs” that his administration has imposed on Chinese imports.
President Trump desperately wants voters to credit him with every single point that the red-hot Dow has accumulated during his administration, disregarding the fact that the complexity of markets makes it difficult to parse out the real impact that a “Great Man” has on equity valuations over an extended period.
But as the stock market lurches toward a devastating collapse this week, we can conclude one thing with certainty: this one’s on you, Donnie.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.com.
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Last modified: July 2, 2020 8:24 PM UTC