U.S. markets fell for the second consecutive day on Tuesday following U.S. President Donald Trump’s tweet threat to place USD 11 Billion in tariffs on EU products. The Dow Jones Industrial Average slipped by over 200 points on Tuesday morning.
Markets edged lower on Monday, which was primarily weighed down by Boeing (NYSE: BA). Boeing took a heavy loss last week after it said it was cutting its 737 production rate from 52 planes per month to 42 planes.
On Tuesday, the Office of the U.S. Trade Representative threatened to levy tariffs on many European goods on late Monday. The threat is in retaliation against European companies’ subsidies for aircraft manufacturers such as Airbus SE, according to MarketWatch.
If the U.S. follows through with its tariff threat, the USD 11 Billion import tariff would affect helicopters, bicycles, cheese and wine.
Rober Lighthizer, U.S. Trade Representative, said that the Trump administration would wait for the World Trade Organization’s clearance to implement the duties. Trump also tweeted early Tuesday morning that the EU has taken advantage of the U.S., also mentioning that it will soon stop.
“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! The EU has taken advantage of the U.S. on trade for many years. It will soon stop!” tweeted Trump.
The tension between the U.S. and the EU come shortly after U.S. representatives said that it was close to reaching a negotiation with China. The U.S. and China were involved in a trade war tension, which resulted in the two implementing tariffs on imported and exported goods between the two. The positive news between the two major global economic nations sent markets spiraling higher, however, the EU tariffs erased the gains made in April.
“Sentiment in Continental Europe is holding up well, considering the heightened tensions between Washington DC and Brussels in relation to the threat of $11 billion worth of tariffs being imposed on European imports,” wrote David Madden, Market Analyst at CMC Markets, in a Tuesday research note.
Investors are intaking the current news of the EU tariff threat, however, corporate earnings are also weighing into the investor sentiment. The banking sector will begin earnings season as JPMorgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC), and PNC (NYSE: PNC) are set to report their quarterly financials on Friday.