The latest escalation in the US-China trade row weighed on industrial stocks on Monday, pushing the Dow and S&P 500 lower.
The Dow Jones Industrial Average finished down 0.7% at 26 562.05.
The broad-based S&P 500 dropped 0.4% to 2 919.25, while the tech-rich Nasdaq Composite Index gained 0.1% to 7 993.25.
New US tariffs on another $200bn of Chinese imports took effect Monday, a move that prompted retaliatory tariffs from Beijing on $60bn in American goods.
China has also reportedly scotched negotiations that had been expected later this week in another twist that was likely to dent investor hopes for a speedy resolution to the impasse.
Industrial companies generally lagged the broader market, with Caterpillar losing 1.5%, Arconic 5.5% and Stanley Black & Decker 1.9%.
Analysts are also watching for Wednesday's Federal Reserve decision, which is expected to result in an interest rate increase.
In deal news, Comcast won a weekend bidding contest with Fox for British broadcaster Sky for $40bn. Comcast shares sank 6.0%, while Fox rose 1.7%.
Pandora Media shed 1.2% after agreeing to be acquired by SiriusXM for $3.5bn. Sirius sank 10.3%.
US-traded shares of Barrick Gold of Canada jumped 5.4% after it agreed to buy Africa-focused rival Randgold Resources to create a global industry champion worth $18.3bn. Randgold rose 6.6% in New York.
Clothing and accessories company Michael Kors dropped 8.2% following reports it is close to a deal to buy Versace for $2bn or more, its latest push into luxury.
Shares of oil giants Exxon Mobil and Chevron both climbed more than one percent as oil prices rallied from a decision by major oil producers over the weekend not to increase output.
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