SPRINGFIELD, Mass. (WWLP) – China struck back against the U.S. on Monday, after president Trump raised tariffs last week.
A lot of investors are concerned about China’s tariff retaliation and it caused stocks to plummet Monday. Fear is rising on Wall Street, because of trade tensions between the U.S. and China.
China said Monday that they will raise tariffs on $60 billion worth of U.S. Goods starting June 1. Those items include aircraft parts, machinery, food, and consumer goods.
“Tariffs increase costs, tariffs are taxes that are paid by consumers and businesses and increasing costs cuts into a corporation’s bottom line impacting profitability,” said Matt Farkas, portfolio manager at St. Germain Investments.
China’s surprise announcement sent stocks to their lowest level in two months Monday. One Springfield man told 22News he stopped investing in the market because of the volatility.
A lot of investors are nervous about what’s going to happen in the stock market on Tuesday after Monday’s two-percent plunge. The Dow Jones plunged 617 points.
“I got rid of all my stocks, right now I strictly do now is put in bonds and savings for the kids,” said Dan of Springfield. “I want to make money I don’t want to lose it.”
Farkas said days like Monday favor investors who are far from retirement.
“It may be counter-intuitive, but younger investors should really root for days like this because you’re buying stocks at lower valuations,” said Farkas. “Buying stocks on sale. So you can accumulate more shares at a lower price.”
These high Chinese tariffs have caused a lot of fear and anxiety on wall street, but experts say don’t panic and stick with your financial plan. Farkas told 22News he expects the stock market to bounce back when China and the United States reach a trade deal.
In the meantime, Farkas recommends maintaining a diverse portfolio, to minimize your risk and exposure to only one sector. He also recommends a broadly diversified portfolio for investors who are close to retirement.
That would include fixed income and other safer investments.