Investors were socked with one-two trade punch Monday. Commerce Secretary Wilbur Ross said President Trump is ready to slap tariffs on $156 billion of Chinese goods on Dec. 15 if the two countries can’t agree on a trade deal.
In an interview with Fox Business, Ross said, “If nothing happens between now and then, the president has made quite clear he’ll put the tariffs in – the increased tariffs." He added that the latest rounds of tariffs won’t "interfere with this year’s Christmas" as retailers have already stocked up.
That was little solace to investors who dumped stocks after a recent record run. The Dow Jones Industrial Average fell more than 200 points in midafternoon trading, while the S&P 500 slipped 23 points and the Nasdaq Composite gave up about 85 points.
“If the China tariffs go into effect, I think you could have something in the neighborhood of a 5% pullback,” Keith Lerner, chief market strategist at SunTrust Bank, told Yahoo Finance’s “The First Trade.”
“We broke above a 20-month trading range and that 3,000 level [on the S&P 500] provides pretty good support,” Lerner said. “Don’t forget, we’re up about 9% from the October lows, so what we’re seeing today is relatively healthy. “
Ross’s tough talk on China came just hours after Trump tweeted that the U.S. will "restore" steel and aluminum tariffs on Brazil and Argentina.
Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries. The Federal....
— Donald J. Trump (@realDonaldTrump) December 2, 2019
Investors were also focused on a report that showed manufacturing activity continued to lag in November, according to the latest ISM Manufacturing Index.
“If we get a sense that the tariffs on Dec. 15 are not postponed, the market’s going to have a nice consolidation,” warns Quincy Krosby, chief market strategist at Prudential. “We may see a lot of money managers locking in their gains for the year because they’ve done very, very well.”
Alexis Christoforous is co-anchor of Yahoo Finance’s “The First Trade.” Follow her on Twitter @AlexisTVNews.