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Stock Markets Drop Amid Escalating Tariff Threats

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Trader John Panin works on the floor of the New York Stock Exchange on Tuesday. U.S. stock markets opened sharply lower as U.S.-China trade tensions grew.
Richard Drew, AP

Trader John Panin works on the floor of the New York Stock Exchange on Tuesday. U.S. stock markets opened sharply lower as U.S.-China trade tensions grew.

The U.S. stock market fell sharply early Tuesday morning in response to President Trump's recent threats to add another layer of tariffs on $200 billion worth of Chinese goods. The Dow Jones industrial average was down about 1.2 percent, or more than 300 points, on pace for its sixth straight daily drop.

The threat of a trade war is leaving investors uncertain and is fueling market volatility, said Greg McBride, chief financial analyst at Bankrate.com.

"Markets are responding to all of the rhetoric with the trade war," McBride said. "A lot of what we're seeing may be negotiating tactics, but it's just going to be a choppy ride due to this concern."

Asian markets also took a hit in the wake of Trump's announcement. China's Shanghai Composite Index dropped 3.8 percent, Hong Kong's Hang Seng fell 2.8 percent and Japan's Nikkei was down 1.8 percent.

"The Chinese economy is highly dependent on exports and what you are seeing is this reflected in Chinese equity markets," McBride said.

Most European indexes were also down Tuesday.

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