US stocks tumbled yesterday on fears of an escalating trade war between the United States and China after US President Donald Trump threatened to slap $100bn (€81bn) more in tariffs and Beijing warned it would fight back "at any cost".
In light of China's "unfair retaliation" against earlier US trade actions, Trump upped the ante by ordering US officials to identify extra tariffs, escalating a high stakes tit-for-tat confrontation.
China Commerce Ministry spokesman Gao Feng said the two countries have not recently held any negotiations, which are impossible under current conditions.
"The market was weak from get-go. It was an uncomfortable state to begin with, clearly the reaction from China to tariffs is clearly the only factor driving the markets today," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin.
After the initial round of tariffs earlier this week, the markets took comfort from Trump's top economic adviser Larry Kudlow's comments that Washington was involved in a negotiation with China rather than a trade war.
Mr Kudlow told CNBC yesterday that he learnt of the new tariffs only last night.
He told Bloomberg TV that negotiations had not yet started, but later said on Fox Business that talks are ongoing.
Mr Kudlow's comments on ongoing negotiations and a tepid March jobs report, which eased fears of faster interest rate hikes, had helped the market recoup some losses earlier in the day.
But that boost was short-lived.
All 30 Dow components were in the red and each of the 11 major S&P sectors were lower.