Additional tariffs on Chinese goods will be catastrophic for global stocks

One Chinese newspaper claimed in its editorial from Tuesday that the U.S. faces a big pressure to resolve its ongoing trade war with China because failed negotiations would likely have major consequences for stocks worldwide.

On Tuesday, the S&P 500 rose after Donald Trump indicated the world's two largest economies might have more time to find a way to avoid raising tariffs. The current deadline before increasing the tariffs is March 1, and the Chinese delegation is in Washington, D.C. this week for trade negotiations.

Trump has frequently cited the U.S. stock market's performance as a gauge of his success. If both sides can't reach an agreement and the Trump team imposes more tariffs on Chinese products while China responds with fiercer countermeasures, then that would be a catastrophic strike to global stock markets.

Trade tensions escalated last year when the Trump administration applied tariffs on $250 billion of Chinese goods, while China responded with its own duties on $110 billion worth of U.S. goods. During a G-20 meeting in December, Trump agreed with the Chinese President not to raise the tariffs if the two sides reach a resolution on those issues within 90 days.

But with little over a week left before the March 1 deadline, there's been little public indication of significant progress.

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