Global stock markets slumped Tuesday after President Donald Trump threatened to put tariffs on another $200 billion in imports from China, and the Chinese government said it would retaliate, bringing tensions between the world's two largest economies closer to a boil.
The Dow Jones industrial average lost 412 points, or 1.7 percent. The Hang Seng index in Hong Kong lost 2.8 percent. Major stock indexes in Asia and Europe also took sharp losses. Trump's new proposal calls for a 10 percent tariff on $200 billion in goods, and Beijing said it would respond with "comprehensive measures." It doesn't import enough goods from the U.S. to match the scale of Trump's proposal but could adopt other methods.
Last week Trump ordered a 25 percent tax on $34 billion in Chinese imports and Beijing matched that total. Those tariffs won't take effect until July 6, which leaves more time for the two countries to negotiate.
The Dow was trading at 24,575 as of 10:30 a.m. Eastern time. The S&P 500 index gave up 29 points, or 1.1 percent, to 2,744. The Nasdaq composite fell 104 points, or 1.4 percent, to 7,642.
Germany's DAX was down 1.6 percent after a similar loss Monday. The CAC 40 of France fell 1.4 percent and in London the FTSE 100 lost 0.6 percent.
The losses were even heavier in Asia, where Tokyo's Nikkei 225 retreated 1.8 percent and Seoul's Kospi gave up 1.5 percent. Indexes in Australia and India took smaller losses.
Industrial and technology companies took some of the worst losses as investors worried that the dispute could grow more intense and drag down global economic growth. Trump accused Beijing of being unwilling to resolve the dispute over complaints it steals or pressures foreign companies to hand over technology. China's Commerce Ministry criticized the White House action as blackmail and said Beijing was ready to retaliate.
Aerospace company Boeing dropped 4.4 percent to $339.16 and construction and mining equipment maker Caterpillar shed 4.1 percent to $142.61. Apple fell 2.4 percent to $184.16 and Facebook gave up 1.6 percent to $194.85.
Automakers fell sharply. GM sank 3.9 percent to $42.25 while Tesla slumped 5.4 percent to $350.77 and Ford retreated 2.3 percent to $11.72.
Shares of Chinese companies listed in the U.S. also slumped. E-commerce company JD.com lost 5.2 percent to $41.49 and its competitor Alibaba slid 4.1 percent to $200.12. Search engine Baidu declined 4.1 percent to $257.81.
Bond prices climbed as investors turned a bit more cautious. The yield on the 10-year Treasury note fell to 2.87 percent from 2.92 percent. That sent interest rates lower and banks skidded as well. JPMorgan Chase surrendered 1.2 percent to $106.88 and Bank of America slid 1.3 percent to $29.01.
In an issue that's become linked to the trade dispute, the Senate on Monday approved a defense policy bill that would block a White House plan to allow Chinese telecom giant ZTE to buy component parts from the U.S. ZTE is accused of violating trade laws by selling sensitive technologies to North Korea and Iran. In April the Commerce Department blocked ZTE from buying U.S. components for seven years, a move that amounted to a death sentence for the company. Earlier this month the Trump administration announced a deal with ZTE, but Senate leaders have sought to reverse it.
ZTE stock tumbled 24 percent in Hong Kong. U.S. companies that supply ZTE also sank. Acacia Communications gave up 4.7 percent to $33.59 and Oclaro sagged 4.3 percent to $8.62.
Oil prices turned lower, with U.S. crude down the most. It fell 1.2 percent to $65.09 a barrel in New York, and Brent crude, the international standard for oil prices, fell 0.3 percent to $75.15 a barrel in London. That affected energy companies. Halliburton slipped 1.5 percent to $45.93 and Schlumberger dipped 2.1 percent to $65.62.
Steel companies also took sharp losses. U.S. Steel fell 4.5 percent to $34.50 and Nucor lost 3.8 percent to $64.21 while aluminum producer Alcoa declined 5 percent to $43.50.
There were still a few gainers to be found on Wall Street. With bond yields falling, some investors bought high-dividend companies like utilities and companies that make and sell household goods. NextEra Energy rose 1.3 percent to $162.54 and CVS Health rose 29 percent to $69.07. The drugstore chain and pharmacy benefits manager said it will start making home deliveries of prescriptions and other items. The service will cost $4.99 and deliveries will be made in one or two days.
Smaller U.S. companies with a domestic focus continued to do better than the multinationals included in the Dow. The Russell 2000 index lost 16 points, or 1 percent, to 1,675. The Russell is up 9 percent this year while the S&P has risen 2.7 percent and the Dow has fallen 0.6 percent.
Elsewhere, Foundation Medicine jumped 28.4 percent to $136.65 after Swiss drugmaker Roche agreed to buy the rest of Foundation for $137 a share, which the companies valued at $2.4 billion.
The dollar fell to 109.82 yen from 110.44 yen. The euro sank to $1.1565 from $1.1615.