Vscode <></> changes color of tags to red and can't use any snippets / auto tag / auto import

Question

When I use VS Code and add <></> tag in my code, rest of the code turns red and I can't use an auto tag / snippets / auto import etc...

Does anybody experience this before? How can I fix it?

That's what my settings.json looks like:

{
    "editor.codeActionsOnSave": {
        "source.fixAll.eslint": true
    },
    "blockman.n01LineHeight": 0,
    "workbench.colorCustomizations": {
        "editor.lineHighlightBackground": "#1073cf2d",
        "editor.lineHighlightBorder": "#9fced11f"
    },
    "editor.wordWrap": "off",
    "diffEditor.wordWrap": "off",
    "editor.guides.indentation": false,
    "editor.guides.bracketPairs": false,
    "editor.inlayHints.enabled": false,
    "window.zoomLevel": 1,
    "editor.minimap.enabled": false,
    "liveServer.settings.donotShowInfoMsg": true,
    "files.associations": {
        "*html": "html"
    },
    "emmet.includeLanguages": {
        "javascript": "javascriptreact"
    },
    "emmet.showExpandedAbbreviation": "always",
    "[javascript]": {
        "editor.defaultFormatter": "esbenp.prettier-vscode",
        "editor.formatOnSave": true,
    },
    "[jsonc]": {
        "editor.defaultFormatter": "rvest.vs-code-prettier-eslint"
    },
    "workbench.iconTheme": "material-icon-theme",
    "terminal.external.osxExec": "iTerm.app",
    "terminal.explorerKind": "external"
    // "editor.defaultFormatter": "esbenp.prettier-vscode",
    // "editor.formatOnSave": true,
    // "[jsonc]": {
    //     "editor.defaultFormatter": "rvest.vs-code-prettier-eslint"
    // }
}

Here is an example of the problem:

]