Global stock markets skidded 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 292 points, or 1.2 percent. Major stock indexes in Asia and Europe also took sharp losses. The Hang Seng index in Hong Kong lost 2.8 percent.
Trump’s new proposal comes days after he ordered a 25 percent tax on up to $50 billion in imports from China. Beijing matched that total with a tax on U.S. goods. Those tariffs won’t take effect until July 6, which leaves the countries more time to negotiate.
President Trump is now threatening a 10 percent tariff on another $200 billion in goods. Beijing said it would respond with “comprehensive measures” if that happens. China doesn’t import enough goods from the U.S. to match the scale of Mr. Trump’s proposal but could adopt other methods.
The Dow was trading at 24,694 as of 12:10 p.m. Eastern time. Earlier it fell as much as 419 points. The S&P 500 index gave up 17 points, or 0.6 percent, to 2,756. The Nasdaq composite fell 61 points, or 0.8 percent, to 7,685.
Germany’s DAX lost 1.2 percent after a similar loss Monday. The CAC 40 of France fell 1.1 percent and in London the FTSE 100 slipped 0.4 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. The dollar also got stronger, and the ICE-US Dollar Index hit its highest level since July. That makes U.S. goods more expensive in other markets.
President 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 3.5 percent to $342.37 and construction and mining equipment maker Caterpillar shed 3.4 percent to $143.58. Apple fell 1.9 percent to $185.16 and Facebook gave up 1.2 percent to $195.92. Automakers fell sharply. GM sank 3.9 percent to $42.25 while Tesla slumped 3.9 percent to $356.25. Chemicals company DowDuPont lost 3.4 percent to $65.48.
The euro sank to $1.1576 from $1.1615. The dollar fell to 110.02 yen from 110.44 yen.
Steel companies also took sharp losses. U.S. Steel fell 3.4 percent to $34.89 while aluminum producer Alcoa declined 4.3 percent to $43.84.
Shares of Chinese companies listed in the U.S. slumped. E-commerce company JD.com lost 4.3 percent to $41.88 and its competitor Alibaba slid 2.6 percent to $203.15. Search engine Baidu declined 3.6 percent to $259.30.
Bond prices climbed as investors turned more cautious. The yield on the 10-year Treasury note fell to 2.88 percent from 2.92 percent. That sent interest rates lower and bank stocks dipped as well.
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 shares tumbled 24 percent in Hong Kong. U.S. companies that supply ZTE also sank. Acacia Communications gave up 4.5 percent to $33.68 and Oclaro sagged 3.4 percent to $8.71.
As the dollar gained strength, oil prices turned lower. U.S. crude fell 1.6 percent to $64.80 a barrel in New York, and Brent crude, the international standard for oil prices, fell 0.5 percent to $74.94 a barrel in London.
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. American Electric Power rose 1.7 percent to $66.60 and Kimberly-Clark gained 1.8 percent to $102.57.
CVS Health rose 3.9 percent to $70.36. 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 10 points, or 0.6 percent, to 1,682. The Russell is up almost 10 percent this year while the S&P has risen 3 percent and the Dow is flat.
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.