China on Monday raised tariffs on hundreds of U.S. goods, retaliating against the Trump administration last week more than doubling tariffs on Chinese imports.

Renewed trade tensions between the world's two largest economies rattled global and U.S. financial markets.

Despite the setback in clinching a trade deal, experts think the U.S. and Chinese officials will continue trade talks.

China has announced it is raising tariffs on $60 billion in U.S. goods in retaliation for the latest levies on its exports announced last week by the Trump administration.

The Chinese finance ministry said Monday that it, effective June 1, it will impose duties of 5% to 25% on hundreds of U.S. products. American-made goods subject to the tariffs include batteries, household appliances, spinach, coffee, construction equipment, rubber, and leather and cotton textiles. That followed Trump's increase Friday of duties on $200 billion of Chinese imports from 10% to 25% in a dispute over Beijing's technology ambitions and trade surplus.

According to Morgan Stanley economists, the tariff hike could trim China's annual economic growth by 0.5 percentage points. That impact could grow if uncertainty prompts companies to cut jobs or postpone investment, they said.

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Stocks dive as trade dispute flares

U.S. stock markets tanked in opening trade Monday, following a downdraft in global financial markets. The Dow dived 511 points, or nearly 2% with the broader S&P 500 and tech-heavy Nasdaq sinking more than 2%.

The dispute between the world's two largest economies is likely to get worse before it gets better. Goldman Sachs analysts think the Trump administration will propose another volley of tariffs on more than $300 billion in Chinese imports. But they note the process to implement the measures would take roughly two months to complete, offering a window for U.S. and Chinese negotiators to conclude a trade deal.

"Trade talks between the U.S. and China are likely to continue, despite the resumption of tit-for-tat tariffs," Freya Beamish, chief Asia economist for Pantheon Macroeconomics, said in a research note.

President Donald Trump say Americans benefit from such tariffs, crediting them in a tweet on Monday for boosting U.S. economic growth. Over the weekend, however, White House chief economic adviser Larry Kudlow conceded that U.S. companies and consumers will also feel the pain.

"Both sides will suffer on this," Kudlow said on "Fox News Sunday."

Tariffs imposed by the Mr. Trump over the last year could cost an average family of four around $767 a year, one study from advocacy group Trade Partnership estimated in February.

The "costs of the tariffs have fallen entirely on U.S. businesses and households," Goldman Sachs said in a client note.