New York: Global stock markets fell on 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.
The Dow Jones industrial average lost 370 points, or 1.5 per cent. The Hang Seng index in Hong Kong lost 2.8 per cent. Major stock indexes in Asia and Europe also took sharp losses.
Trump's new proposal calls for a 10 per cent tariff on $200 billion in goods, and Beijing said it would respond with "comprehensive measures." It doesn't import enough goods from the US to match the scale of Trump's proposal but could adopt other methods.
Last week Trump ordered a 25 per cent 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 to negotiate for the world's two largest economies.
The Dow traded as 24,617 as of 10 am Eastern time. The S&P 500 index gave up 26 points, or 1 per cent, to 2,746. The Nasdaq composite fell 89 points, or 0.8 per cent, to 7,658.
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 criticised the White House action as blackmail and said Beijing was ready to retaliate.
Aerospace company Boeing dropped 3 per cent to $344.07 and construction and mining equipment maker Caterpillar shed 2.7 per cent to $144.60. Apple fell 1.5 per cent to $185.93 and Facebook gave up 0.9 per cent to $6.55.
Bond prices climbed as investors turned a bit more cautious. The yield on the 10-year Treasury note fell to 2.89 per cent from 2.92 per cent. That sent interest rates lower and banks skidded as well. JPMorgan Chase surrendered 1.2 per cent to $106.84 and Bank of America slid 1.3 per cent to $29.01.
Oil prices turned lower, with US crude down the most. It fell 1.4 per cent to $64.96 a barrel in New York, and Brent crude, the international standard for oil prices, fell 0.5 per cent at $74.99 a barrel in London. That affected energy companies. Chevron lost 1.2 per cent to $124.44 and Schlumberger dipped 2.3 per cent to $65.52.
Steel companies also took sharp losses. US Steel fell 3.5 per cent to $43.87 and Nucor lost 2.9 per cent to $64.84 while aluminum producer Alcoa declined 3 per cent to $44.40.
Germany's DAX was down 1.4 per cent after a similar loss on Monday. The CAC 40 of France fell 1.2 per cent and in London the FTSE 100 lost 0.5 per cent.
The losses were even heavier in Asia, where Tokyo's Nikkei 225 retreated 1.8 percent and Seoul's Kospi gave up 1.5 per cent. Indexes in Australia and India took smaller losses.
With bond yields falling, some investors bought high-dividend companies like utilities and real estate investment trusts. NextEra Energy rose 0.9 per cent to $161.71 and Welltower gained 0.9 per cent to $57.54.
Smaller US companies with a domestic focus continued to do better than multinationals, and the Russell 2000 index lost 8 points, or 0.5 per cent, to 1,683. The
Russell is up almost 10 percent this year while the S&P has risen 3 per cent and the Dow has taken a small loss.
There were still a few gainers to be found on Wall Street. Foundation Medicine jumped 28.6 per cent to $136.90 after Swiss drugmaker Roche agreed to buy the rest of
Foundation for $137 a share, which the companies valued at $2.4 billion.
CVS Health rose 1.9 per cent to $69 after 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.
The dollar fell to 109.99 yen from 110.44 yen.
The euro sank to $1.1561 from $1.1615