U.S. Stock Market prediction: Wall Street to sink under President Donald Trump's 100 per cent tariff on China? Here's what experts are saying

US President Donald Trump announced an additional 100 percent tariff on China Friday and threatened to cancel a summit with Xi Jinping, reigniting his trade war with Beijing in a row over export curbs on rare earth minerals. Trump said the extra levies, plus US export controls on "any and all critical software," would come into effect from November 1 in retaliation for what he called Beijing's "extraordinarily aggressive" moves. Chinese goods currently face US tariffs of 30 percent under tariffs that Trump brought in while accusing Beijing of aiding in the fentanyl trade, and over alleged unfair practices. China had said earlier on Friday that it would impose "special port fees" on ships operated by and built in the United States after Washington announced charges for Chinese-linked ships in April. Stock markets fell as the simmering trade war between the United States and China reignited, with the Nasdaq down 3.6 percent and the S&P 500 down 2.7 percent.

Washington and Beijing engaged in a tit-for-tat tariffs war earlier this year that threatened to effectively halt trade between the world's two largest economies. Trump had threatened the tariffs hours earlier in a lengthy surprise post on his Truth Social network that said China had sent letters to countries around the world detailing export controls on rare earth minerals.

Rare earth elements are critical to manufacturing everything from smartphones and electric vehicles to military hardware and renewable energy technology. China dominates global production and processing of these materials.


President Trump said he had not canceled the meeting with Xi but his tariff threats sent market heavyweight shares tumbling. Nvidia, Tesla , Amazon.com and Advanced Micro Devices all fell more than 2 per cent after the bell.

JPMorgan Chase CEO Jamie Dimon, in a BBC interview on Wednesday, warned of a heightened risk of a significant Wall Street correction within the next six months to two years.

"With equities at high valuations, this selloff is a sign of jitters," said Gene Goldman, chief investment officer at Cetera Investment Management. "Everything is priced for perfection, so the uncertainty increases market jitters. All of this adds uncertainty to economic growth," Gene Goldman stated.

In April, Trump's announcement of what he called Liberation Day tariffs stunned markets and sent investors scrambling, causing S&P 500 companies to shed a combined $2.4 trillion in market value.

But some investors say the latest U.S.-China trade tensions are unlikely to significantly change the market trajectory, with AI remaining the driving factor.

"This is definitely a significant issue, and it could warrant a pullback but I don't necessarily see it derailing the AI theme that's been driving the market," said James St. Aubin, chief investment officer at Ocean Park Asset Management.

FAQs

Q1. What is current tariffs on China?
A1. Chinese goods currently face US tariffs of 30 percent under tariffs that Trump brought in while accusing Beijing of aiding in the fentanyl trade, and over alleged unfair practices.

Q2. When will USA's 100 per cent tariffs come into effect?
A2. USA's 100 per cent tariffs on China would come into effect from November 1.