The latest lurch downwards in the US stock market underscores the reality that, while the Trump administration may have an isolationist hue to it, the US isn’t isolated, even from the consequences of its own actions.

Illustration: Dionne Gain Credit:

The market opened strongly on Monday after what has been a torrid month, but that changed quickly after the publication of a Bloomberg report that the administration was preparing for the announcement of tariffs on all $US257 billion ($360 billion) of China’s remaining exports to the US if talks between Donald Trump and China’s president Xi Jinping failed to end the US-initiated trade friction.

At one point the market was down more than 2 per cent, although the S&P 500 recovered late in the day to close 0.7 per cent lower. The plunge in the market this last month is nearing 10 per cent and has wiped out all the year’s gains despite a healthy corporate profit reporting season.

With the existing 10 per cent tariff on $US250 billion of Chinese imports scheduled to rise to 25 per cent in January if the trade face-off isn’t resolved, the threat of another $US257 billion clearly unsettled the market.