Stock futures looked to extend last week’s losses as prospects for a breakthrough in U.S.-China trade discussions dimmed.

Futures for the S&P 500 (ES=F) fell 1.46%, or 42.25 points, as of 8:08 a.m. ET. Dow futures (YM=F) fell1.36 %, or 352 points, while Nasdaq futures (NQ=F) declined 1.99%, or 151.75 points.

China is set to raise tariffs on some U.S. goods starting June 1, Bloomberg News reported Monday morning. The move is an apparent retaliation against the recent hike to levies the Trump administration implemented on billions of dollars worth of Chinese imports late last week.

On Friday, the Trump administration raised the rate of tariffs on $200 billion worth of Chinese imports to 25%, and announced that further tariffs on another $300 billion in imports would be forthcoming. Trump has claimed repeatedly that China “broke the deal” the two sides had been working toward over the past several months, leading to the use of tariffs to try and extract further concessions.

The sudden end to five months of a trade ceasefire with China rattled markets, dragging the S&P 500 to its worst weekly decline since just before Christmas. Meanwhile, haven assets have continued to rise, with the yield on the 10-year Treasury note falling to an almost six-week low near 2.4%. Treasury yields move inversely to prices.

Analysts are bracing for the escalating trade tensions to brake the pace of growth in the U.S. In the first quarter, the U.S. economy expanded at a better-than-expected rate of 3.2%.

“With rising protectionist measures, the damage to economic growth is increasing. If current U.S. measures and those likely to be taken by China remain in place, GDP can be expected to be hit to the tune of 0.5% in China, 0.25% in the U.S., and 0.15% globally,” Klaus Baader of Societe Generale wrote in a note. “If the U.S. levies tariffs on all Chinese goods, and China retaliates, these losses could easily double.”

A further deterioration of trade-deal progress would apply broad downward pressure to equities, some sectors are especially vulnerable. Shares of manufacturing bellwethers including Caterpillar (CAT) and 3M (MMM) each dropped by more than 5% last week, underperforming the broader market’s about 2% decline.

Tech investors are also watching trade talks unfold “with white knuckles,” Wedbush analyst Dan Ives wrote in a note.

“The core underlying fear in the eyes of tech investors is around what this move as well as a retaliation move from the Chinese can do to the tech food chain, semi stocks (Intel, Nvidia, etc.), and clearly Apple, which heavily relies on China both on the supply (Foxconn) as well as demand front,” Ives said.

“With worries that Trump potentially plans to enact additional tariffs on Chinese goods down the road if this trade situation spiral further, tech stocks are ultimately caught in the crossfire, with Apple and the semiconductor space remaining front and center and thus weighing on stocks accordingly this morning,” he added.

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