China imposes retaliatory tariffs on U.S. goods as fears of global recession grow

China imposed retaliatory tariffs on $60 billion worth of U.S. goods, sending U.S. stock futures tumbling Monday morning and increasing fears that the ongoing trade war instigated by President Donald Trump may wind up causing a global recession in the near future.

Reuters reports that after a week of deep losses on Wall Street, the move by China appears to have spooked investors before the market even opens:

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Futures were weaker earlier after U.S. officials demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any “bitter fruit” that harmed its interests.

Justin Oneukwusi, portfolio manager at Legal & General Investment Management, said the immediate fear of recession is causing tremendous uncertainty among investors:

“Overall, in the short term the chances of recession have increased, so equity markets will be priced on the back of that.

How far this escalates is what the market is really worried about … The important thing is what’s the impact on growth, and that’s what the market is really fearing.”

UBS economist Tao Wang warned that a full-blown trade war is now on the horizon:

“The risk of a full-blown trade war has materially increased, even though both sides seem to still want a trade deal and talks are expected to continue.”

Just last week, the Washington Post explained how Trump’s trade war could prove disastrous for the American economy:

“A trade war, with across-the-board tariffs on US-China trade, would push the global economy towards recession,” wrote Bank of America Merrill Lynch economists in a note to clients Friday.

The Tax Foundation, which typically leans to the right, said Friday that the tariffs already in place amount to $72 billion worth of new taxes on Americans. If Trump puts even more tariffs, as he has threatened, growth would fall by 0.75 percent, “effectively offsetting almost one-half of the long-run impact of the Tax Cuts and Jobs Act,” and employment would fall by more than 580,000 jobs, the Tax Foundation forecasts.

A recession could prove disastrous for Trump’s chances of re-election as his approval rating is already at a historic low for an incumbent president.

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