U.S. stocks fell Wednesday in reaction to the news that the country is pursuing a new set of tariffs that would hit $200 billion in Chinese goods.
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The Dow Jones Industrial Average fell 219.21 points, or 0.88%, to 24,700.45. The S&P 500 lost 19.82 points, dropping to 2,774.02. The Nasdaq Composite was down 42.59 points at 7,716.61.
In a list published late Tuesday, after the markets had closed for the day, the U.S. trade representative said the 10% tariffs would target a variety of products imported from China, including clothing, baseball gloves, bicycles, refrigerators and seafood.
“New tariffs have been coming for a while, having been initially hinted at after China first announced retaliatory measures itself,” said Craig Erlam, senior market analyst at Oanda. “The recent announcement was confirmation of this and is a reminder that Trump is not bluffing and a trade war is a very real possibility, which naturally isn’t good for markets.”
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The additional U.S. tariffs, which will go through a two-month approval process including a public hearing, come after China retaliated in a tit-for-tat trade skirmish last week.
Asian markets responded by falling, with China’s Shanghai Composite Index dropping by 1.8%, Hong Kong's Hang Seng finished the session down 1.3% and Japan's Nikkei ended the day down 1.2%, snapping a three-day winning streak.
Before the tariff news was reported, stocks rose Tuesday, with the Dow recording a fourth consecutive day of gains as traders continued to focus on the strong economy with trade tensions taking a backseat.
Investors offered little reaction to Wednesday’s economic data reports, which included producer prices, wholesale sales and inventories.
Commodities took a hit as the U.S. dollar climbed. Many commodities are priced in U.S. dollars; therefore, when the dollar appreciates, it makes commodities more expensive for holders of international currencies, denting demand.
Oil was hit particularly hard by the news that Libyan exports will resume. Crude prices dropped 5% to $70.38 a barrel.
FOX Business’ Ken Martin and Matthew Rocco contributed to this article.