Stocks Plunge After Trump Tweets "I am a Tariff Man" - Throwing China Deal in Doubt
"If it is [a real deal], we will get it done," Trump said in a Twitter post. "But if not remember, I am a Tariff Man."
The stock market turned sharply lower Tuesday after U.S. President Donald Trump threw fresh doubt on a China trade agreement that he touted just days ago as "an incredible deal."
Although he held out the possibility of an extension of the 90-day trade truce with China, negotiated Saturday with Chinese leader Xi Jinping, Trump warned Tuesday he would revert to tariffs if the two sides could not resolve their differences.
Wall Street, which soared Monday after the president's weekend comments, plunged Tuesday in response. The Dow Jones Industrial Average lost 799 points, or 3.1 percent, to close at 25,027. The Standard and Poor's 500 dropped 3.2 percent, and the technology-heavy Nasdaq plunged 3.8 percent.
The threat of an escalating trade war between the world's two largest economies has loomed large over financial markets and the global economy for much of the year and investors greeted the ceasefire agreed by Trump and Chinese President Xi over the weekend with relief.
The Republican president addressed one of the concerns by indicating he would not be opposed to extending the 90-day truce.
Trump said Tuesday his team of trade advisers led by China trade hawk U.S. Trade Representative Robert Lighthizer would determine whether a "REAL deal" with China was possible.
"If it is, we will get it done," Trump said in a Twitter post. "But if not remember, I am a Tariff Man."
It was these comments that threw the market into turmoil today, sending the treasury bond market sharply higher.
While Trump hailed the agreement with Xi "an incredible deal", a lack of detail from the Chinese side has left investors and analysts wondering if Trump's exuberance is warranted.
"It doesn't seem like anything was actually agreed to at the dinner and White House officials are contorting themselves into pretzels to reconcile Trump's tweets (which seem if not completely fabricated then grossly exaggerated) with reality," JPMorgan Chase said in a trading note.
White House economic adviser Larry Kudlow said on Tuesday that a reduction in Chinese tariffs on U.S. cars and agricultural and energy commodities would be a "litmus test" for whether U.S.-China trade talks were on track.
Washington also expects China to promptly address structural issues including intellectual property theft and forced technology transfers, U.S. officials have said.
White House National Security Adviser John Bolton told the Wall Street Journal CEO Council meeting on Tuesday that Chinese theft of U.S. intellectual property was among the administration's top concerns.
He said the United States should look into a rule that would bar imports of Chinese products that used stolen U.S. intellectual property.
Trump has long accused China of unfair trade practices that hurt Americans and the U.S. economy.
"When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power," he said on Tuesday.
His appointment of Lighthizer to lead the talks instead of Treasury Secretary Steven Mnuchin puts one of the administration's toughest China critics in charge. Trump said on Tuesday that Lighthizer would work closely with Mnuchin, Kudlow and trade adviser Peter Navarro.
(Reuters contributed to this article.)