Dueling Tariff Announcements Blamed For Stock Market Volatility

Apr 4, 2018
Originally published on April 5, 2018 9:50 am
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DAVID GREENE, HOST:

American stock markets are open, and at this point, they are way down. Both domestic and international stocks have been riding really a rollercoaster all this week. And one reason for the volatility is likely the U.S. and China's dueling announcements on tariffs. I want to bring in NPR business reporter Jim Zarroli, who is on the line. Hi, Jim.

JIM ZARROLI, BYLINE: Hi, David.

GREENE: All right. So stocks opened down quite a bit it looks like. Where - which stocks are taking the real hits here?

ZARROLI: Yeah. We saw the Dow fall about 2 percent at the open. Then it came back a bit. The losses are pretty broad. We're actually now in a - what they call a correction, which means other - the stocks are down 10 percent from their highs. There's been a lot of volatility in the market since the end of January. We've seen a lot of sort of swings of triple digits in the Dow. Now, it has to be said, we've had periods of volatility like this before. And we've, you know, had a really good run in the markets lately. I mean, the Dow was up 5,000 points last year. It was up in January. So it's...

GREENE: It was never going to stay that high.

ZARROLI: No. Well, no, I mean, this tends to happen. But we need to keep it in perspective. We still have gained a lot over the past year.

GREENE: So a lot of the conversation this morning is about China and these new proposed tariffs on things like American soybeans and some other products. Can we definitively tie that threat from the Chinese to the movement we're seeing this morning?

ZARROLI: It's clearly a factor. Now, the Chinese tariffs don't go into effect right away. And China really made clear that it sees what it's done as kind of a tactical move. They want to negotiate. So there still is time to stop this from escalating. But clearly, a lot of investors are worried about where this could lead. I mean, a trade war would have ripple effects throughout the world's economy. And that's being reflected in the markets today.

GREENE: So it sounds like it's pretty safe to say that one factor is that the markets were that high for a while and there was going to be this sort of movement back downwards, but the trade is definitely playing a role here in the minds of investors and their confidence.

ZARROLI: Yeah, yeah. And trade isn't the only issue, too, we have to say that. Since - since the end of January, really, we've seen several factors. We've seen technology stocks, you know, which were an engine of growth for so long, they've been falling for different reasons, individual companies like Amazon and Facebook having specific problems. Facebook, for instance, have has - there have been questions about the breach of user data.

GREENE: Right.

ZARROLI: Then we've also had the Federal Reserve raising interest rates. So there are other issues, but the threat of a trade war is clearly on the minds of a lot of people and especially so today.

GREENE: Are we hearing from the White House yet about, I mean, the potential trade war in general and about what the markets are doing?

ZARROLI: Yeah, and they seem to be sort of dismissing concerns. I mean, the White House has released a statement just a little while ago saying we are not in a trade war with China. That war was lost many years ago by the foolish or incompetent people who represented the U.S. We cannot let this continue. So, you know, no sense that the market turmoil is making the White House back down at all. In fact, they seem to be - down on the rhetoric. Trump just tweeted a little while ago (reading) when you're already $500 billion down, you can't lose.

He's talking about the trade - overall trade deficit in goods and services. In other words, he's saying, you know, things can't get - things are so bad, they can't get worse. But I think it's safe to say from what we've seen in the markets that a lot of investors are worried that they can.

GREENE: NPR business reporter Jim Zarroli. Jim, thanks a lot.

ZARROLI: You're welcome. Transcript provided by NPR, Copyright NPR.