Stocks are shrugging off the latest round of tariffs between the U.S. and China and rallying on Tuesday, even with warnings the trade war could be more prolonged and harmful to the global economy than many investors believe.
The Trump administration slapped 10 percent tariffs on $200 billion worth of Chinese goods Monday and said those tariffs would rise to 25 percent as of Jan. 1. China retaliated with its own tariffs on $60 billion in U.S. goods.
"It's a very modest response," said Edward Alden, a senior fellow at the Council on Foreign Relations, of China's reaction. "There's no question China's hurtingand they may want to negotiate. The problem is the Trump administration may be overplaying its hand. The harder they push, they may push the Chinese into a corner where politically and for just reasons of saving face, they can't negotiate with the administration, and secondly the administration hasn't established a negotiating process. There's a real divide between the trade hawks and doves."