Stock market in volatile period because of new tariffs

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BUFFALO, N.Y. (WBEN) - After President Trump's threat to increase tariffs on China from 10 percent to 25, uncertainty in the market caused notable losses in the stock market on Monday.

"I'm not surprised to see it," Niagara University's Director of Financial Markets Laboratory Ed Hutton said. "The markets over the last year or so have been reacting with a great deal of volatility to any kind of good news or bad news with regard to China trade. The volatility has been that as soon as it looks like it might be settled, the market seems to recover all that.

....of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!

— Donald J. Trump (@realDonaldTrump) May 5, 2019

If anything, Hutton suggested that the losses on Wall Street are a reminder of how much the United States trades with China. According to the US Census Bureau, the United States imported more than four times as much as they exported to China. As of February, the US exported more than $15.5 billion of goods to China compared to $74.8 billion imported.

The tariffs imposed by President Trump further add to the speculation of a trade war between the two nations, which only adds to the uncertainty in the markets.

"I think a trade war is going to be bad for everybody," Hutton said. "Even when we have a lot of great economic things like we've had, sometimes a trigger will cause a fairly stark contraction. This is a potential type of action that could cause something like that."

Hutton is also keeping an eye on the federal reserve's impact with the trade developments, which he said will drive the markets for future.

Congressman Chris Collins on Monday said he supports the president's tariffs on China.

"It's been noisy but let's face it, China is a net exporter into the United States," Collins said. "They depend on our economy. So President Trump is dealing in a position of strength. But in that, there are unintended consequences. We're dealing with it on the steel tariffs and some of those impacts, as well as the aluminum, the retribution from China on our agricultural problems."