Stocks are off to another rocky start on Wall Street.
Trade war fears drove the Dow down 400 points, or 1.6%, in early trading on Tuesday. That put it in negative territory for the year and on track for its sixth straight decline.
President Donald Trump threatened Monday evening to impose tariffs on an additional $200 billion worth of Chinese goods if Beijing follows throw with its promise to retaliate against a previous round of US tariffs.
“Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States,” Trump said in a statement.
Companies that do a lot of business in China were among the biggest losers on the Dow on Tuesday. Boeing and Caterpillar fell more than 3% apiece, and Apple dropped more than 2%.
There is no end in sight to the trade skirmish, as both sides continue to up the ante. The Chinese Commerce Ministry responded that it would “strike back hard” with “measures that match the US move in quantity and quality.”
Investors had tried to brush off Trump’s repeated threats against China, but retaliation has spiraled between the two countries. It has become impossible for the market to ignore the possibility of a trade war.
“This is just what we predicted — a tit-for-tat trade war has erupted and American families are caught in the middle,” National Retail Federation president Matthew Shay said in a statement Monday evening. “Higher prices for everyday essentials and lost jobs threaten to sap the energy out of the strong US economy.”
Peter Boockvar, chief investment officer at Bleakley Advisory Group, blasted Trump’s attempt to gain Chinese concessions.
“The strategy now seems a trade war of attrition,” he said in a note to clients on Tuesday. “The means to that end is now going off the rails.”
