China’s Finance Ministry announced it was increasing tariffs on about $60 billion worth of U.S. products to 25%, up from 10%, in retaliation to the U.S. decision to raise duties on Chinese goods.

The increase would affect more than 5,000 goods, including cotton, aircraft parts, grains, and machinery. It goes into effect on June 1, the Ministry said.

On Friday, the U.S. government announced it was increasing tariffs on more than $200 billion of Chinese imports to 25% from 10%, with U.S. officials accusing the Chinese of backtracking on commitments they had previously made on trade.

“The measures by the United States have led to an escalation of Sino-U.S. economic and trade frictions, contrary to the consensus between China and the United States on resolving trade differences through consultations, jeopardizing the interests of both sides and not meeting the general expectations of the international community,” the Ministry said in a statement.

The Dow Jones Industrial Average was down more than 700 points in early afternoon trading amid fears of an escalating trade war.

“The recent escalation in U.S.-China trade tensions is taking a worsening toll on stocks as rising retaliatory tariffs risk sparking a full-blown trade war,” said Alec Young, managing director of global markets research at FTSE Russell. “Investors are increasingly worried an anticipated second-half profit rebound may now evaporate as President Trump’s threat to tariff the remaining $325 billion in Chinese imports would disproportionately target consumer products like iPhones, thereby posing a greater threat to the consumption-driven U.S. economy.”

On Sunday, there had been some optimism a deal could be reached after President Trump’s top economic adviser, Larry Kudlow, said there was a “strong possibility” that President Trump would meet with Chinese President Xi Jinping at the G20 economic summit next month in Japan.