Wall Street stocks plunged on Monday, with losses on Nasdaq exceeding three per cent, after China announced it was ramping up tariffs on United States goods, escalating the year-long trade dispute.
About an hour into the trading session, the Dow Jones Industrial Average was down nearly 530 points, or 2.0pc, at 25,412.74.
The broad-based S&P 500 dropped 2.1pc to 2,821.61, while the tech-rich Nasdaq Composite Index tumbled 2.7pc to 7,7022.21.
Beijing announced on Monday that it will increase tariffs on $60 billion worth of US goods from June 1, striking back after Washington more than doubled tariffs on $250 billion in Chinese goods, and also started the process to impose punitive duties on the nearly all Chinese imports.
A total of 5,140 US products will be subject to additional tariffs of 5pc, 10pc, 20pc and 25pc starting from June 1, the finance ministry in Beijing said in a statement.
The escalation, from rates of 5pc and 10pc, was announced hours after Trump warned China not to retaliate against the latest US tariffs hike.
The additional tariff of 25pc will be levied against 2,493 goods including liquefied natural gas, soy oil, peanut oil, petrochemicals, frozen vegetables and cosmetics, the ministry said, and of 20pc on 1,078 products.
“China's adjustment on additional tariffs is a response to US unilateralism and protectionism,” the ministry said. “China hopes the US will get back to the right track of bilateral trade and economic consultations and meet with China halfway.”
The editor of the party-owned Chinese newspaper Global Times said on Twitter that Beijing was considering additional actions, including dumping US Treasuries, ending US agricultural purchases and reducing orders for Boeing airplanes.
Boeing fell 3.4pc. A spokesman for the company said Boeing was “confident the US and China will continue trade discussions and come to an agreement than benefits both US and Chinese manufacturers and consumers".
Other US companies with large China operations suffered big declines, including Apple, down 5.3pc, Caterpillar, down 4.3pc, Deere & Company, down 5.2pc, General Motors, down 3.2pc and Starbucks, down 2.2pc.
Among other companies, Uber Technologies shed pc in its second trading session after faltering on Friday in a market debut and closing below its initial public offering price.
The broader market retreat indicated growing concern that talks between the US and China could fall apart.
US stocks posted a modest recovery on Friday following the conclusion of trade talks after both sides vowed to keep talking, even as they failed to strike a deal after months of back-and-forth, and the US tariff increase took effect.