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The Dow Jones Industrial Average opened sharply lower Thursday as investors digested some of the strongest indications yet that President Donald Trump's protectionist policies are having a negative impact on American companies and the broader global economy.
After Asian markets tumbled overnight and European exchanges stumbled, U.S. futures were trading lower on Thursday morning, dragged down by Apple's stunning announcement Wednesday that saw shares in the tech giant tumble 8 percent after it slashed revenue guidance for 2019.
The Dow fell by almost 500 points just 45 minutes into the second trading day of the year. The broader S&P 500 fell by just 1.7 percent, and the tech-heavy Nasdaq was down 2 percent.
Apple Chief Executive Officer Tim Cook warned Wednesday in a public letter to investors that sales were impacted by a slowdown in China, telling CNBC in an interview that “the trade tensions between the United States and China put additional pressure on their economy."
Apple made history in 2018 by becoming the first public U.S. company to have a valuation of $1 trillion — a crown it quickly lost in the last quarter of the year when shares fell by 30 percent as concerns mounted that the latest generation of iPhones would not have the usual robust holiday sales.
From Ford to FedEx, and Gucci to GM, Apple is just the latest company to warn that trade tensions are hitting its bottom line. Ford's Chief Financial Officer Bob Shanks told NBC News in October that Trump's auto tariffs have impacted the company to the tune of $1 billion.
Tesla has slashed prices on some of its models in China in order to absorb the impact of tariffs, saying it is currently operating on a 55 to 60 percent cost disadvantage.
On the retail front, Chinese shoppers will account for 45 percent of the luxury market by 2025, according to one report. A slowdown in that nation's economy would have a widespread global impact from a nation of 1.4 billion people.
China is not the only partner with whom Trump is sparring — he slapped tariffs on imports from the European Union in June, prompting a retaliatory response from that trading bloc. That, in turn, prompted Harley-Davidson to shift production overseas for some of its motorcycles, saying tariffs would add $2,200 to each motorcycle exported from the U.S. to the E.U.
The ongoing trade skirmish between the U.S. and its closest trading partners began last summer when Trump imposed a 25 percent tariff on steel and aluminum imported from China to punish that country for what the White House considers to be unfair trade practices.
“They’re playing chicken and so far, I don’t see anybody blinking,” said Michael O. Moore, an economics professor at George Washington University. "Many businesses are quite afraid about where this is all going.”