Wall Street Slips as China Sanctions on U.S. Spark Tensions/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks opened lower Tuesday as trade tensions reignited between Washington and Beijing following Chinese sanctions on a South Korean shipbuilder’s U.S. affiliates. The S&P 500 fell 1.3%, while the Nasdaq dropped nearly 2%. Investors reacted to signs that U.S.-China economic frictions are deepening, despite earlier reassurances.
China Trade Tensions Quick Looks
- S&P 500 fell 1.3%; Dow dropped 494 points
- China sanctions 5 U.S. subsidiaries of Hanwha Ocean
- Nasdaq drops 1.9%, tech stocks broadly decline
- China retaliates against U.S. shipbuilding revival plans
- Bitcoin falls 3.6%; Ethereum drops 7%
- Port fees between China and U.S. take effect
- Hanwha shares fall 5.8% in Seoul; Kospi down
- Domino’s and Wells Fargo beat earnings expectations
- Global markets down: Europe, Asia see red
- Energy prices dip; Brent and WTI crude prices fall
Deep Look: Wall Street Drops as Beijing Targets U.S. Shipbuilding Links
NEW YORK (AP) — U.S. markets opened sharply lower on Tuesday as renewed trade tensions between the United States and China triggered investor anxiety and sent stocks and cryptocurrencies tumbling. The move followed a surprise announcement by China’s Commerce Ministry, which imposed sanctions on five U.S. subsidiaries of South Korean shipbuilder Hanwha Ocean, a company with growing ties to the American naval industry.
The S&P 500 declined 1.3%, reversing gains from its strongest session since May. The Dow Jones Industrial Average dropped 494 points (1.1%), while the Nasdaq Composite fell 1.9%, weighed down by widespread losses across technology stocks.
The unexpected sanctions appear to be Beijing’s response to President Donald Trump’s efforts to strengthen America’s shipbuilding capabilities through partnerships with allies like South Korea. Hanwha acquired the Philly Shipyard in Pennsylvania last year and holds U.S. Navy contracts for maintenance and overhaul projects.
“China just weaponized shipbuilding,” said Kun Cao, deputy chief executive at consulting firm Reddal. “Beijing is signaling it will hit third-country firms that help Washington counter China’s maritime dominance.”
The tensions also impacted Asian markets, with Hanwha Ocean’s stock plunging 5.8% in Seoul. South Korea’s Kospi index declined 0.6%, while Japan’s Nikkei 225 slid 2.6%, erasing gains from last week. Political uncertainty in Japan added to the negative sentiment after the collapse of the ruling coalition, casting doubt on whether Sanae Takaichi will become the nation’s first female prime minister.
The global implications were also felt in European markets, where Germany’s DAX fell 1.4%, France’s CAC 40 dropped 1.1%, and the UK’s FTSE 100 slipped 0.3%.
The economic fallout extended into cryptocurrency markets, as investors turned risk-averse. Bitcoin sank 3.6% to $111,227.50, and Ethereum tumbled 7%. Bitcoin ETFs fell across the board by 3% to 6%, reflecting a broader retreat from speculative assets.
The renewed instability came despite President Trump’s attempt to reassure markets over the weekend via his Truth Social platform, where he posted: “Don’t worry about China.” That followed his Friday threat to double tariffs on China, reacting to Beijing’s decision to tighten export controls on rare earth minerals—critical components in electronics and defense technology.
On top of the sanctions, new port fees on U.S. and Chinese vessels took effect Tuesday, further tightening maritime trade routes and disrupting global shipping logistics.
As investors watched geopolitical tensions rise, attention also turned to corporate earnings and the Federal Reserve, with Fed Chair Jerome Powell expected to speak later in the day.
Despite market drops, several companies delivered strong earnings reports:
- JPMorgan Chase dipped 0.7% despite beating Wall Street expectations, marking its seventh consecutive quarter of sales and profit growth, buoyed by record trading revenue and increased M&A activity.
- Wells Fargo rose 2.8% after exceeding analyst estimates for the third quarter, with net interest income and fee income both rising in its consumer and commercial segments.
- Domino’s Pizza jumped 3.5% after reporting strong third-quarter sales and profit. U.S. same-store sales rose 5.2%, driven by targeted promotions.
Meanwhile, U.S. Treasury yields slipped in the bond market as investors sought safer assets amid the escalating trade spat.
In energy trading, prices also retreated. Benchmark U.S. crude fell $1.36 (2.3%) to $58.13 per barrel, while Brent crude, the global benchmark, dropped $1.37 to $61.93.
The day’s downturn underscores how quickly investor sentiment can shift in response to foreign policy moves. While recent economic resilience and corporate performance have buoyed Wall Street, continued uncertainty over U.S.-China trade relations threatens to cast a long shadow over global financial markets.
As Beijing demonstrates its willingness to target third-party countries involved in U.S. strategic industries, analysts warn this new front in the trade conflict could complicate efforts to stabilize relations and add fresh volatility to global supply chains.
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