I Am Shocked No Stock Market Crash Today | Summary and Q&A

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May 6, 2019
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Financial Education
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I Am Shocked No Stock Market Crash Today

TL;DR

President Trump's unexpected tweets about increasing tariffs on Chinese goods shocked the stock market, but the impact was not as severe as expected.

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Questions & Answers

Q: What did President Trump's tweet about tariffs reveal?

President Trump's tweet indicated his intention to raise tariffs on Chinese goods, going against his previous statements and causing uncertainty about the U.S.-China trade deal.

Q: Who pays the tariffs imposed on Chinese goods?

Contrary to President Trump's claim, the tariffs are actually paid by the importing companies in the US, not by China. This means that US-based companies will bear the burden of the increased tariffs.

Q: How did the stock market react to the tariff announcement?

Although Chinese stocks experienced significant declines, the reaction in the overall stock market was not as drastic as expected. The Dow Jones Industrial Average fell by less than 200 points, defying predictions of a much larger drop.

Q: What impact could the increased tariffs have on US companies and the stock market?

If the US-China trade deal falters and tariffs continue to rise, it could hurt US companies that rely on Chinese business. Companies with significant exposure to China, such as Alibaba and Wynn Resorts, saw their stock prices decline. This could lead to weaker earnings and negatively affect the stock market overall.

Summary & Key Takeaways

  • President Trump's tweets revealed his plan to raise tariffs on Chinese goods, contradicting his previous statements and surprising the stock market.

  • The announcement suggested a possible delay in the U.S.-China trade deal and imposed higher tariffs on various goods.

  • Chinese stocks took a hit, but the overall stock market reaction was not as dramatic as anticipated.

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