NEW YORK (Reuters) - U.S. stocks slid on Tuesday as escalating trade tensions between the United States and China triggered global growth fears and drove investors away from riskier assets.
The Dow Jones Industrial Average posted its second-biggest daily percentage drop of the year, while the S&P 500 and Nasdaq registered their third-biggest percentage drops, even as the major indexes pared losses to end off their session lows.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin said late on Monday that China had backtracked from commitments made during trade negotiations. Those comments followed President Donald Trump’s unexpected statement on Sunday that he would raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent.
Beijing said on Tuesday that Chinese Vice Premier Liu He will visit the United States on Thursday and Friday for trade talks. Additional tariffs are set to take effect on Friday if a trade agreement is not reached by then.
Monday’s comments from Lighthizer and Mnuchin raised concerns among some investors that trade talks between China and the United States could take much longer to resolve than previously thought.
“Week after week, we’ve heard there has been progress and that a deal would be reached,” said Kate Warne, investment strategist at Edward Jones in St. Louis. “Now the goalposts have moved. There’s been quite a shift in expectations.”
Investors expressed concern that additional tariffs, if imposed, could interrupt supply chains and hamper economic growth.
“The threat of tariffs has not been trotted out since the end of December,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh. “It could disrupt the symbiosis between (China and the United States).”
