Evercore ISI thinks China's prompt response to U.S. tariffs had one objective: put more pressure on the U.S. equity market. "It has become a full-on tariff war between the U.S. and China with Beijing, to our surprise ... Beijing pulled the trigger earlier since it used to announce responses on the effective dates of U.S. tariffs. Not all makes sense," Neo Wang, the firm's China strategist, wrote in a Friday note to clients. "This earlier-than-expected announcement looks on purpose to inflict further damage on U.S. stock market while China is on holiday Friday and market closed." U.S. stocks sold off again on Friday after China's Finance Ministry announced the country will impose a 34% tariff on all goods imported from the U.S. beginning on April 10. This matches President Donald Trump's decision earlier this week to impose 34% of additional levies on China. The ministry said Trump's latest tariffs — which now bring the U.S. effective levy rate on Chinese imports to 54% — are "inconsistent with international trade rules" and "seriously" undermining Chinese interests. China also added 11 U.S. firms to the " unreliable entities list " that the Beijing administration says have violated market rules or contractual commitments, among other restrictions. In midday trading, the Dow Jones Industrial Average was down more than 1,400 points, or 3.5%. The S & P 500 dipped 4% along with the Nasdaq Composite. Friday's losses put the Nasdaq in bear market territory, down more than 20% from an all-time high set in December. Beijing's measures may not be entirely sound, however, and could have strong implications for the prospect of negotiations between the two countries, according to the Evercore ISI. "It is hard for us to [make] sense of the strength of Beijing tariff response," Wang wrote. "Hurting the U.S. with a blanket tariff comes at the cost of domestic impact given China's reliance on US tech imports." "Beijing may feel tariff escalation is now close to its end and it is time to look tough and increase bargaining chips in preparation for negations or its tough stance could deter further levies by Trump and force him to the negotiation table," he added. "However, it is not a sure bet, as things could go the other way." Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You'll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
