Fears of an escalating trade war between the United States and China ricocheted through the American economy on Tuesday, sending stocks down sharply and prompting businesses large and small to brace for fallout.

For months, investors and companies had been lulled into a sense of security that the world’s two largest economies appeared to be getting closer to a deal to resolve their battle. That calm was shattered this week when the Trump administration threatened to impose a new round of tariffs on hundreds of billions of dollars of Chinese products.

A delegation of Chinese leaders is preparing to travel to Washington for talks later this week, and Trump administration officials pledged to try to get trade negotiations back on track. But it is unclear whether the two sides can defuse the newest tensions.

After financial markets closed on Monday, Treasury Secretary Steven Mnuchin and Robert Lighthizer, the United States trade representative, emphasized that President Trump’s threats were not idle.