Dow Plunges 190 Points as Trump’s Trade War Targets EU

The Dow and broader U.S. stock market declined sharply on Tuesday, as investors wrestled with the prospect of a trans-Atlantic trade war after the Trump administration threatened new tariffs on the European Union.

Dow Plunges; S&P 500, Nasdaq Follow

All of Wall Street’s major indexes recorded losses on Tuesday, with the Dow Jones Industrial Average shedding as much as 238 points. The blue-chip index closed down 190.44 points, or 0.7%, at 26,150.58. All but three of the Dow’s 30 index members finished lower.

The broad S&P 500 Index declined 0.6% to 2,878.20, with nine of 11 primary sectors finishing in the red. Energy, industrials and financial stocks fell by at least 1% on average.

The technology-focused Nasdaq Composite Index settled down 0.6% at 7,909.28.

New Trade War?

On Tuesday, the Trump administration proposed to implement new tariffs on $11 billion worth of EU products to level the playing field after Brussels announced new subsidies to support Airbus, a Netherlands-based aerospace and defence company. The list of possible tariffs include airplanes, helicopters, cheese and wine.

“The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products!” Trump tweeted Tuesday. “The EU has taken advantage of the US on trade for many years. It will soon stop!”

Trump’s comments suggest the White House could be planning a new front in the global trade war once it secures an agreement with China. The China deal appears to be getting closer based on talks held last week; both sides have vowed to continue negotiating via teleconferences.

China’s official news agency recently declared that both sides have “achieved new progress,” with remaining issues to be handled through “various effective means.”

Crypto Markets Stabilize

Cryptoassets traded mixed-to-lower on Tuesday, as investors took a breather following an eventful weekend that saw bitcoin (BTC) and the broader market make new five-month highs.

The combined value of all cryptocurrencies consolidated around $180.5 billion after peaking north of $185 billion on Sunday, according to CoinMarketCap. Bitcoin held firm above $5,200, where it controlled 51% of the overall market capitalization. The leading digital currency traded above $5,300 on Sunday as the bulls prepared for a bigger push north.

As is usually the case, bitcoin’s moves were uncorrelated with the broader financial system. This could make BTC an attractive bet if stock markets crater in the second quarter as a result of weak earnings and declining global growth. Read more: As Global Economy Approaches Crisis Level, Bitcoin Could Be the Answer.

Among the majors, the best-performing altcoins on Tuesday were EOS (EOS) and Binance Coin (BNB). EOS climbed 2.5% to $5.61 while BNB gained 1.3% to $18.44.

Ethereum (ETH), XRP (XRP), Litecoin (LTC) and bitcoin cash (BCH) fell between 0.5% and 2.9%.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi