MINNESOTA - The tariff talk has been going on for months now, but international trade experts say the president's comments on Monday took things to a whole new level.
The Dow lost 287 points, its sixth consecutive loss. The Nasdaq and S&P 500 were also down.
The sell-off came after President Trump threatened to put tariffs on another $200 billion in imports from China, and China said it would retaliate.
"Everybody loses from a trade war," University of Minnesota professor Bob Kudrle says.
Up until now Kudrle says no one knew if the tariffs on both sides would stick.
Based on what he’s hearing from the president this week, Kudrle says an all-out trade war has suddenly become a scary possibility.
"A lot of people who didn't take a trade war seriously are taking it seriously now," Kudrle says.
Minnesota will see a bigger impact than most states, says Jeffrey Phillips of the Minnesota Department of Agriculture.
“We send a lot to China,” Phillips says. “We’re definitely in the top 10 for states who will see the biggest impact if this happens.”
Soybean prices dropped to a nine-year low after the president’s comments Monday.
Other Minnesota products, like pork, corn and wheat, will also be affected by these tariffs, Phillips says.
Minnesota's world-renowned medical device industry will also see an impact.
Kudrle says the components to make these devices could be subject U.S tariffs on China.
And once they're assembled, the devices could be taxed the other way.
"It works both ways,” Kudrle explains. “The medical device industry really illustrates one of the complexities of globalization.”
This “double dipping” effect is playing out in numerous industries, Kudrle says, making it difficult to determine how the tariffs will affect everyday consumers.
With some products consumers will see lower prices, because companies will be forced to sell off an overabundance of product they can’t sell.
With other products consumers will end up paying more, because the tariffs on Chinese goods could lead to scarcity and higher prices.
"The situation now is really, really unclear,” Kudrle says.
The first round of tariffs between China and the U.S. is scheduled to start on July 6.