The Dow Jones Industrial Average dropped 618 points, or 2.4 percent, on Monday after China announced retaliatory tariffs increases on $60 billion of U.S. goods.
The Dow fell to 25,324 and returned to a level it first reached in January of 2018.
The S&P 500 suffered its steepest daily drop in months, sinking 2.4 percent and closing down 70 points.
President Trump raised tariffs from 10 percent to 25 percent on $200 billion of Chinese imports to the United States last week after the two sides failed to reach a deal to end the tariffs.
China responded on Monday by raising its own tariffs on $60 billion worth of American goods.
The realization by traders that the trade war between the United States and China could last indefinitely led to Monday’s sell-off.
“We’re in a great position right now, no matter what we do,” Trump told reporters attending an event he held at the White House on Monday with Hungary’s prime minister.
Trump also said he would be meeting with Chinese President Xi Jinping next month and expressed confidence a deal could be worked out.
“Yeah, I think China wants to have it,” he said.