Stocks dipped precipitously on Monday as China responded to the Trump administration’s latest sanctions on its economy by allowing the yuan to fall sharply against the dollar.
The Chinese yuan was trading at above 7 per U.S. dollar Monday morning, its lowest level in over a decade, after the People’s Bank of China devalued the currency. The move was seen as a response to the Trump administration’s Thursday threat to impose tariffs on another $300 billion in Chinese goods. The U.S. already has a 25 percent tariff on about $250 billion of Chinese imports.
In response to the news, the Dow Jones Industrial Average plunged 750 points Monday, while the S&P 500 sank 2.9 percent and the Nasdaq Composite dropped 3.4 percent.
Boeing dropped 2.3 percent, Caterpillar sank 3 percent, and shares of Apple dropped 5.1 percent.
President Trump blasted Beijing’s move on Twitter, repeating his frequent refrain that China manipulates its currency to gain an economic edge over the U.S.
The Federal Reserve slashed interest rates last week for the first time since the 2008 economic crisis, citing slowing economic growth as well as escalating trade tensions between the Trump administration and China.
In recent months, hopes of a trade deal with China have waned as negotiations between the two world powers stalled and the ongoing trade war intensified.
The People’s Bank of China directly blamed the Trump administration’s “unilateralism and trade protectionism measures and the imposition of increased tariffs on China” on Monday in a statement. It added that it would keep its currency “fundamentally stable at a reasonable and balanced level.”