The first Monday in September is Labor Day. Falling on a Monday, it makes for what is known as Labor Day weekend.

However, I will remember this Labor Day as the “tit-for-tat” weekend because of the fireworks that surfaced between the United States and China that only intensified the trade war that now is more than 1 1/2 years old.

On Sunday, Sept. 1, the United States applied new tariffs of more than $100 billion of Chinese goods with another $200 billion of goods delayed to Dec. 15. Immediately, China retaliated and, as it promised, placed new tariffs on some U.S. goods such as soybeans and crude oil.

Needless to say, most markets were not happy learning that the trade war with China escalated with both sides retaliating in kind with trade tariffs. It now seems the United States and China are even further apart from striking a trade deal.

On Tuesday, the first trading of the short week and in light of the “tit-for-tat” from China, the Dow Jones fell 285 points. Also weighing on the Dow was the historical fact that September is the most bearish month of the year for stocks.

In addition, a gauge of U.S. manufacturing from the Institute for Supply Management showed the sector experiencing its first decline since 2016. The report hinted that a recession in the United States is lurking in the shadows due to the trade war.

However, the Dow fell no deeper than Tuesday and quickly rallied more than 800 points. Again, the stock market easily catches a bid and is well supported while the U.S. ag markets, farmers and ranchers continue to suffer greatly because of the trade war — it has been that way since early 2018.

Also on Tuesday, the U.S. Department of Agriculture showed U.S. farm exports were cut once again for shipments of soybeans and corn. The USDA now estimates total agriculture exports will decline 6.2%, the lowest since 2016. More damning yet is the decline in exports places the U.S. ag trade surplus at $5.2 million, the smallest since 2006.

Unfortunately, for U.S. wheat producers and prices, it was worse yet. Wheat prices in Chicago fell to a four-month low, wheat prices in Minneapolis slipped to a 9 1/2 year — yes, year — low and K.C. wheat prices fell to levels not seen since late 2005, 14 years ago. The wheat market is a disaster, which does not bode well for soybeans or corn.

Later in the week, front month cattle futures fell to a new three-year low while soybean and corn prices hit a 3 1/2 month low. The week was quite bearish for most U.S. ag markets — so bearish, in fact, that the CRB index, which is to commodities as the Dow Jones is to stocks, fell to a two-year low.

No doubt, the trade war with China has been weighing most heavily on U.S. farmers and ranchers. But consider the following statement from Associated Press: “The United States and China on Sunday put in place their latest tariff increases on each other’s goods, potentially raising prices Americans pay for some clothes, shoes, sporting goods and other consumer items before the holiday shopping season.” Now, America households are suffering, as well.

And J.P. Morgan, the global investment bank, stated that Trump tariffs will cost the average American household $1,000 a year. However, its study was done before Trump raised the Sept. 1 and Dec. 15 tariffs to 15% from 10% over the “tit-for-tat” weekend. Thus, the Trump tariffs will likely cost each American household more than $1,000 this calendar year.

Late in the week, it was announced that U.S. and Chinese envoys will meet in early October for more talks aimed at ending a tariff war that threatens global economic growth.

Such talk is encouraging, but I also have heard that sort of chatter for the past year and a half. At some point in time, a deal must be struck between China and the United States.

I cannot recall a period with so much volatility with stocks, bonds and commodities as now. Each day, most all markets are flying all over the place with the blame being placed on the trade war with China.

How much longer such a scenario remains in place is anyone’s guess. But next year when the Labor Day weekend rolls around, I will be quick to remind everyone that in 2019 it was called the “tit-for-tat” weekend.

Hopefully, the trade war will end sooner than later. My fingers are crossed.

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