By Ben St. Clair
-- U.S. proposes new tariffs on $200 billion of Chinese goods
-- Treasury yields decline, dollar edges up
-- Crude futures, copper fall
Stocks fell sharply Wednesday as concerns over escalating trade tensions threatened to erase the week's gains.
The Trump administration on Tuesday said it would assess 10% tariffs on an additional $200 billion in Chinese goods. The move drove Asian stocks down, with Hong Kong's Hang Seng dropping 1.6% and China's Shanghai Composite Index falling 1.8%.
The Stoxx Europe 600 fell 1% in early morning trading and futures pointed to lower openings for both the S&P 500 and Dow Jones Industrial Average.
The tariffs, which wouldn't come into effect for at least two months, cover a variety of Chinese goods, including tuna, salmon and other fish, luggage, tires, dog leashes, handbags, baseball gloves, furniture, apparel and mattresses. Hearings on the proposed measures are scheduled to take place in late August.
China called the move "totally unacceptable" in a statement attributed to an unnamed ministry spokesman.
A response from China would mean "moving from a trade conflict to a trade war between the two superpowers," analysts at Commerzbank said in a note Wednesday.
Japan's Nikkei fell 1.2% and South Korea's Kospi was down 0.6%.
Market participants had been tentatively optimistic on trade earlier in the week, driving stocks higher. Investors will also be keeping an eye on Wednesday's North Atlantic Treaty Organization summit as Mr. Trump reiterates criticism of what he sees as insufficient military spending from European allies.
Trade concerns continued to weigh on commodities with copper futures falling 3.3% to near one-year lows. The metal has been hit especially hard amid the escalating trade rhetoric and is seen by many analysts as a barometer for global economic health.
Brent crude reversed course Wednesday, falling 1% to $78.07 a barrel.
Elsewhere in markets, yields on 10-year Treasurys fell to 2.837% from 2.873% on Tuesday. Yields fall as prices rise.
The WSJ Dollar Index, which measures the U.S. currency against 16 others, was up 0.2%.
Bob Davis contributed to this article.
Write to Ben St. Clair at [email protected]