Stocks bounce back after major global selloff: Live updates - CNN

Trade wars are not easy to win. And they are hard to stop.

It's a lesson investors are re-learning this week. An escalation of the US-China trade war has dragged the Dow and the S&P 500 down 6% from recent record highs, the Nasdaq down more than 7%.

Here's the play-by-play: After fruitless trade talks in Shanghai last week, President Donald Trump declared new tariffs of 10% on $300 billion in Chinese-made goods. (Think tennis shoes, clothing, toys, and consumer electronics, until now shielded from tariffs to minimize the cost to American consumers.)

China responded by guiding its currency to the lowest level in a decade, and barring its companies from buying US agriculture products. The Trump Administration retaliated late Monday by declaring China a currency manipulator. China shot back: No, it is not.

Trade wars are messy and unpredictable. And there is no end in sight.

Goldman Sachs informed its clients it now expects the trade war to last until the next election in 2020. Goldman told clients the Fed will need to cut interest rates another 25 basis points to stabilize the economy amid all the trade damage.

The Wall Street Journal editorial board this morning warned the president's trade war has now become a currency war, introducing new risk to global growth:

"Mr. Trump is punishing China all right. He's also putting U.S. growth in jeopardy by unleashing trade and current risks that undermine the benefits of his tax reform and deregulation. Sometimes trade wars end badly for everyone."

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