Investor confidence started to return early this week amid a momentary lull in the trade war, following Beijing's retaliation tariffs on U.S. imports last week after Trump hit China with a 25 per cent tariff worth $34bn on imports.
US President Donald Trump ordered his government to prepare tariffs on a further US$200bn of imports from China on Monday.
On Friday, the USA imposed 25-percent tariffs on around $34 billion in Chinese goods, sparking an immediate dollar-for-dollar retaliation from Beijing. The index had gained for the past two sessions, having enjoyed a lull from the trade war fears that lashed global markets last week.
China, which imports 60 per cent of the soybeans traded worldwide, bought 32.9 million tonnes from the USA a year ago, accounting for 34 per cent of the total purchases.
The latest move suggests that Trump - who in March declared that "trade wars are good and easy to win" - may be compromising on his pledge to spare consumers from the pain.
"The Chinese government as always will have no choice but to take the necessary countermeasures", said China's ministry of commerce in a statement, without elaborating further.
American tourist killed by stray bullet in Mexico City
Her body will be flown from Mexico back to Chicago, where she will be buried, on Tuesday. She was celebrating her first wedding anniversary on the trip.
Just when the Dow Jones seemed poised to break past 25,000, news of an extra $200 billion in tariffs on China knocked it back down, and the media is in an absolute frenzy.
U.S. Trade Representative Robert Lighthizer said the United States would impose tariffs of 10 percent on the additional Chinese imports.
The US complains that China uses predatory practices in a push to challenge American technological dominance.
"Tonight's announcement appears reckless and is not a targeted approach", said Senate Finance Chair Orrin Hatch in a statement. These tactics include the outright theft of trade secrets, government subsidies to homegrown tech firms and demands that USA and other foreign companies hand over technology if they want access to China's vast market.
China's Commerce Ministry slammed the latest U.S. threat as a "totally unacceptable" escalation of their dispute and promised to protect its "core interests".
As a leading grain trader in these regions, COFCO can help to meet domestic demand, Yu said.
"If China does react with further escalation in tariffs, the United States equity market as well as the dollar-yen or Australian dollar could face further downward pressures", he said. "Unfortunately, China has not changed its behavior - behavior that puts the future of the USA economy at risk". While earlier tariffs were expected to have only a limited impact, economists warn a full-blow trade war could derail the strongest economic upswing in years.