Jeremy Siegel: Stocks could drop 10% to 20% if China and US ‘dig in’ on trade war

Chinese President Xi Jinping (R) waves to the press as he walks with US President Donald Trump at the Mar-a-Lago property in West Palm Beach, Florida, April 7, 2017.
Jim Watson | AFP | Getty Images
Stocks ought to drop notably if the United States and China dig in at some point of exchange talks, Wharton finance professor Jeremy Siegel advised CNBC on Tuesday.

Tensions between the U.S. and China are excessive as U.S. Trade Representative Robert Lighthizer stated Monday that new tariffs on 25% of goods will go through on Friday. Siegel said this motives most important risk to the downside.

“If each facets dig in this market could go down 10% to 20%,” Siegel said on “Squawk Alley. ” “It’s a query of what takes place on Friday. If it does happen on Friday, what is the retaliation of the Chinese? And that’s totally dominating the market for the subsequent two or three weeks.”

Siegel stated the market built in about a 90% danger that exchange negotiations with China would be resolved. Since Trump’s tweets on Sunday threatening to increase tariffs the market, the market now initiatives no extra than a 70% chance of a resolution, he said. This alternate is what is shocking the market downward, he said.

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