Illustration: Aïda Amer/Axios

President Trump raised tariffs on $200 billion worth of Chinese goods Friday morning to 25%. The president also is expected to tax nearly all of China's imports as punishment for Beijing’s attempt to "renegotiate" a trade deal.

Why it matters: Having long priced in a happy ending to the trade war, the market will need to reassess U.S. businesses and the state of the U.S. economy. Further, supply chains may need to be rethought and entire businesses may have to be re-evaluated.

  • UBS Global Wealth Management's CIO Mark Haefele announced the bank would reduce risk exposure, noting further escalation could lead to a 10–15% decline in U.S. equities and 15–20% fall in the Chinese market.
  • "Trade-exposed sectors could suffer the most, including technology, industrials, and energy," he said in a note.

Details: Lingling Wei and Bob Davis of the Wall Street Journal report that Beijing was emboldened by the perception that the U.S. was ready to compromise because of Trump's lobbying for rate cuts by the Federal Reserve, a sign the U.S. economy is weak and in need of stimulus.

What's next? The global economy is so complex and interdependent that the second-, third-, and fourth-order effects are effectively unforeseeable.

  • The first-order effects of Trump's tariff hikes will be felt by any U.S. companies importing goods from China, since they’re going to have to pay the tariffs.
  • Second-order effects would include things like U.S. companies passing increased costs on to U.S. consumers, as well as retaliatory tariffs from China on U.S. goods.
  • Third-order effects might include U.S. companies relocating operations to Vietnam and other Asian countries if they think these tariffs are going to be here to stay. But at this point we’re in the realm of speculation. 

The big picture: On the U.S. side, the big question will be whether Trump is serious about taxing all incoming goods from China or whether he will continue to give carve-outs for products like the iPhone, as he did when he first began announcing tariffs last year.

On the Chinese side, authorities will likely target U.S. industries with political importance. Ahead of the 2018 midterms it was Harley-Davidson motorcycles, whiskey, cranberries, soybeans and pork, which hit — among other places — the home states of Senate Majority Leader Mitch McConnell and then-House Speaker Paul Ryan.

  • Expect tariffs this round to be just as targeted, and for the Chinese government to start taking aim at U.S. businesses that operate in China with home bases in important swing states.

Go deeper: Trump is wrong on how China tariffs work

Go deeper

Boeing's one-two punch

Illustration: Aïda Amer/Axios

The grounding of Boeing’s 737 MAX was the worst crisis in the plane-maker’s century-long history. At least until the global pandemic hit.

Why it matters: Wall Street expects it will be cleared to fly again before year-end. Orders for what was once the company’s biggest moneymaker were expected to rebound after the ungrounding, but now the unprecedented slump in travel will dash airlines’ appetite for the MAX and any other new planes, analysts say — putting more pressure on the hard-hit company.

New downloads of TikTok, WeChat to be blocked in U.S. on Sunday

Illustration: Sarah Grillo/Axios

The Commerce Department issued Friday an order blocking new downloads of WeChat and TikTok in the U.S. as of Sept. 20.

The state of play: President Trump has been in a standoff with TikTok, threatening to ban the app if it's Chinese owner, ByteDance, does not relinquish control to a U.S. company. A deal is in the works with the American tech company Oracle, but would need to go through before Sunday to prevent TikTok from being ousted from app stores.

Updated 3 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

  1. Global: Total confirmed cases as of 6:30 a.m. ET: 30,199,007 — Total deaths: 946,490— Total recoveries: 20,544, 967Map
  2. U.S.: Total confirmed cases as of 6:30 a.m. ET: 6,675,593 — Total deaths: 197,644 — Total recoveries: 2,540,334 — Total tests: 90,710,730Map
  3. Politics: Former Pence aide says she plans to vote for Joe Biden, accusing Trump of costing lives in his coronavirus response.
  4. Health: Pew: 49% of Americans wouldn't get COVID-19 vaccine if available today Pandemic may cause cancer uptick The risks of moving too fast on a vaccine — COVID-19 racial disparities extend to health coverage losses.
  5. Business: Retail sales return to pre-coronavirus trend.