China retaliates on tariffs, stock markets go into a slide

A screen displays the Dow Jones Industrial Average after the close of trading on the floor of the New York Stock Exchange in New York, U.S., April 13, 2019.

Apple also took heavy losses, tumbling 5.8 percent. Farming equipment maker Deere drove losses in the industrial sector. The Nasdaq, which is heavily weighted with technology stocks, slid 269.92 points, or 3.4 percent, to 7,647.02, its worst drop of the year.Trade talks between the US and China concluded Friday with no agreement and with the US increasing import tariffs on $200 billion of Chinese goods to 25 percent from 10 percent. China on Monday announced tariff increases on $60 billion of US imports, particularly farm products like soybeans.

Some of the biggest chipmakers in the US lean heavily on China for their sales, making them particularly vulnerable to the worsening tensions between the two countries. In another sign of how nervous investors were feeling, an index known as Wall Street's "fear gauge," which measures how much volatility the market expects in the future, spiked 28.1 perent.

First quarter corporate earnings reports have been better than expected. Instead of a sharp contraction, profits for the S&P 500 are down less than 1 percent. However, the fallout from the trade war could spoil an expected earnings recovery in the second half. Energy futures finished mostly lower. U.S. crude dropped 1 percent to settle at $61.04 per barrel. Brent crude, the international standard, closed 0.6 percent lower at $70.23 per barrel.

The president has repeatedly insisted that increased tariffs on Chinese goods don't hurt American consumers. But Kudlow, head of the president's National Economic Council, acknowledged over the weekend that US consumers and businesses will bear some of the costs.In the US, prices of soybeans, targeted by Chinese tariffs last year, fell Monday to a 10-year low on fears of a protracted trade war.

In fact, US farm exports to China approached $26 billion in both 2012 and 2013 and came in at $19.5 billion in 2017 before his trade war began taking a toll on agricultural sales to China.Republican Sen. Chuck Grassley of Iowa said it is time for US allies to "get in the game" to push China to the negotiating table.

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