NEW YORK (AP) — Global stock indexes sank Wednesday after the Trump administration released a list of $200 billion in goods that could be hit with tariffs and China said it would retaliate. The dollar spiked and big exporters plunged.
Companies that sell computer chips, oil, basic materials and heavy machinery dropped after the Trump administration proposed a 10 percent tax on a wide list of imports. It is scheduled to make a decision on the potential tariffs after Aug. 31.
China's government said it will take "firm and forceful measures" if the new tariffs are enacted. That response would likely include measures other than tariffs. Trump has threatened to put new taxes almost everything the U.S. imports from China.
Jack Ablin, chief investment officer for Cresset Wealth Advisors, said the tariffs can have big effects: a tariff on an import from one country can lead to broad price increases for similar items, and rising taxes and costs might can companies to change their supply lines in less efficient ways.
"When you start adding all of that together, you end up with typically higher inflation and low productivity," he said. "Higher inflation tends to rob consumers of their income and lower productivity tends to rob companies of their profits."
A four-day winning streak for the S&P 500 ended as the benchmark index lost 19.82 points, or 0.7 percent, to 2,774.02. The Dow Jones Industrial Average dropped 219.21 points, or 0.9 percent, to 24,700.75. The Nasdaq composite fell 42.59 points, or 0.5 percent, to 7,716.61. The Russell 2000, an index of smaller and more U.S.-focused companies, gave up 11.96 points, or 0.7 percent, to 1,683.66.
The S&P 500 had closed at a five-month high Tuesday.
The new list of tariff targets from the U.S. Trade Representative includes vacuum cleaners, furniture and car and bicycle parts, but U.S.-branded smartphones and laptops were excluded. Still, chipmakers, which make large portions of their sales in China, slumped. Nvidia fell 2.3 percent to $247.53 and Micron Technology lost 2.8 percent to $54.18.
Construction equipment maker Caterpillar lost 3.2 percent to $136.76 and farm equipment maker Deere lost 2.2 percent to $141.42.
The ICE U.S. dollar index jumped 0.6 percent, a large move. The dollar rose sharply against the Japanese currency, increasing to 112.04 yen from 111.28 yen. The euro fell to $1.1674 from $1.1745.
The stronger dollar hurts exporters because it makes U.S. goods and commodities more expensive in other markets. Crude oil prices tumbled partly because of the rising dollar and partly because Libya said it will start exporting oil again, a move that will increase supplies.
Benchmark U.S. crude fell 5 percent to $70.38 a barrel in New York. Brent crude, used to price international oils, plunged 6.9 percent to $73.40 a barrel in London.
On Friday the U.S. and China put 25 percent taxes on $34 billion in imports. China imported only $130 billion in goods from the U.S. last year, but it could retaliate against the U.S. through other means including regulatory moves and investigations of U.S. companies.
The trade dispute stems from Washington's complaint that Beijing steals or pressures companies to hand over technology and its concerns that plans for state-led development of Chinese companies in robotics and other fields might erode American industrial leadership.
Indexes in Europe and Asia took steeper losses as investors worried the worsening trade dispute will hamper the growth of the global economy. France's CAC 40 and the DAX in Germany both lost 1.5 percent. Britain's FTSE 100 index dropped 1.3 percent.
Japan's benchmark Nikkei 225 fell 1.2 percent and the South Korean Kospi lost 0.6 percent while Hong Kong's Hang Seng shed 1.3 percent.
Airlines took sharp losses after American said it expects slower fare growth in the U.S. American Airlines slumped 8.1 percent to $35.96 and United Continental slid 3.4 percent to $68.88.
Twenty-First Century Fox raised its offer for European pay TV service Sky. Fox already owns 39 percent of Sky and wants to buy the rest, but rival Comcast has stepped in with its own bid. Fox says the new offer values Sky at $32.5 billion.
Fox lost 4 percent to $47.79. In the U.K., Sky stock fell 0.5 percent.
Bond prices moved higher. The yield on the 10-year Treasury note fell to 2.84 percent from 2.87 percent.
The dip in bond yields helped utility companies make small gains. Utility companies tend to pay large dividends, so investors who want income often buy them when bond yields fall.
In other commodities trading, gold lost 0.9 percent to $1,244.40 an ounce. Earlier this month gold hit its lowest price since early 2017. Silver fell 1.7 percent to $15.82 an ounce. Copper skidded 3.4 percent to $2.74 a pound.
Wholesale gasoline fell 4.6 percent to $2.06 a gallon. Heating oil sank 5.4 percent to $2.10 a gallon. Natural gas rose 1.5 percent to $2.83 per 1,000 cubic feet.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay