The Dow Jones Industrial Average had its worst session since Jan. 3, plummeting 617.38 points, or 2.4%, to 25,324.99, on Monday after China promised to raise tariffs on $60 billion of American goods.

The S&P 500 dropped 2.41%, to 2,811.87, while the Nasdaq dropped to 7,647.02, or 3.41% — its biggest daily percentage loss of 2019.

The tariffs, which will take effect on June 1, hit American agriculture and manufacturing along with other U.S. industrial goods such as household items. 

The move comes after the Trump administration's move last week to increase tariffs on $200 billion worth of Chinese imports to 25 percent. Trump on Monday morning posted on Twitter that it would be "very bad" for China if they retaliated. Trump said that his administration would help U.S. farmers hit by China's new tariffs.

Trump's top economic advisor, has said that "both sides will suffer" due to the ongoing U.S.-China trade battle, which was seen as an admission that the tariffs could hurt American consumers.

American companies, such as Apple and Caterpillar, were hit hard by the trade escalation, with shares of Apple down by 6 percent by noon and Caterpillar down by 5 percent.

"Companies like Apple and Caterpillar have significant revenue exposure outside the US – immediate sell-offs will impact these types of companies," Kristina Hooper, chief global strategist for investment management company Invesco told the Financial Times.