World financial markets took a nose dive as China announced higher tariffs Monday on $60 billion worth of American goods.
The move was in retaliation to President Donald Trump’s latest penalties on Chinese products.
As of 3:43 PM, the Dow Jones Industrial Average was down 650.61 points. The S&P is down more than 2.5% while the NASDAQ was down more than 3.5%.
Tariffs of 5% to 25% will take effect on June 1 on about 5,200 American products, including batteries, spinach and coffee, the Finance Ministry said.
The announcement followed a move by the U.S. on Friday to raise duties on $200 billion of Chinese imports to 25%, up from 10%.
Two days of trade negotiations between U.S. and Chinese representatives broke up Friday without any agreement.
The tensions “raise fresh doubts about this recovery path,” said Morgan Stanley economists in a report.
In a tweet earlier today, President Trump said in part “Very bad for China, very good for USA!”
China’s state media tried to reassure businesses and consumers that the ruling Communist Party has the resources and policy tools to respond.
“There is nothing to be afraid of,” said the party newspaper People’s Daily. “The U.S.-instigated trade war against China is just a hurdle in China’s development process. It is no big deal.”
European indexes mostly finished more than 1% lower. In Asia, the Shanghai Composite index fell 1.2%. Japan’s Nikkei 225 index gave up 0.7% and South Korea’s Kospi fell 1.4%.
Gold mining companies were some of the few stocks making gains amid the broad market slump as the price of gold, another safe-play asset, rose 1% to $1,301 an ounce.