What happened: Stocks of US and European tech companies sank yesterday after China retaliated in equal measure to new US tariffs. Beijing announced 25% import tariffs on $60 billion of US goods starting on June 1. European companies shed 1.2% of share value, but the Dow Jones Industrial Average and S&P 500 fell by 2.4%, and Nasdaq by 3.4%, the worst daily percentage loss it has seen in the past year. Apple fell 5.8%, Netflix by 4%, Amazon by 3.6%, Facebook by 3.6%, and Alphabet by 2.7%.
Why it’s important: At the beginning of last week, an agreement between the world’s two largest economies seemed possible but, on Friday, import duties Trump had threatened to hike on $200 billion worth of Chinese goods from 10% to 25% were triggered. Industrial chemicals, machinery parts, and consumer goods are amongst the worst hit. Tech products like iPhones will face higher manufacturing costs, while tariffs on finished goods will make them more expensive for Chinese consumers.