Last week US stocks hit record highs, but President Donald Trump on Sunday reminded investors of the fear that dominated Wall Street throughout much of last year.
Trump renewed threats to raise tariffs on Chinese goods, sending Dow futures down more than 400 points Sunday evening. The broader S&P 500 was set to open Monday down 1.4%. Nasdaq futures were down 1.5%.
The Nasdaq includes a large number of technology stocks that could be hit particularly hard by higher tariffs on Chinese products.
A grim opening for US stocks Monday would follow a week of record-highs. The Nasdaq closed at a high of 8,164 Friday, and the S&P 500 was near its all-time high set earlier in the week. The Dow had been closing in on its all-time high set in October.
President Trump warned he would consider increasing tariffs on a $200 billion of Chinese goods to 25% from the current 10%, reactivating a threat he removed months ago.
The sudden escalation of trade tensions could badly catch investors off guard. Not only had US and Chinese officials signaled a trade deal was imminent, but hopes for trade peace helped drive US stocks sharply higher this year.
Trump said that he believed talks were progressing too slowly and the tariff increase could happen “shortly.” He also warned his administration could tax nearly all of the roughly $500 billion of Chinese exports to the United States.
The two countries had planned a critical week of negotiations to end a yearlong tit-for-tat trade war.