U.S. stock futures weakened on a holiday Monday as tariffs on Chinese goods went into effect.

With stock exchanges closed for Labor Day, futures on the S&P 500 ES00, +1.46% fell 0.7% to 2903.75, while futures on the Dow Jones Industrial Average YM00, +1.18% dropped 199 points, or 0.8%, to 26207.

Tariffs of 15% on $112 billion of Chinese goods went into effect on Sunday, as did retaliatory Chinese tariffs on U.S. products like crude-oil imports.

“While there were few hopes that U.S. President Trump would cancel the tariffs in a last-minute change of heart, investors were nevertheless steering clear of risk assets on the first trading day of the month amid worries that the latest hike in duties would be more damaging than previous ones,” said Raffi Boyadjian of XM Investment Research in London.

A report from Bloomberg News that the two sides are struggling to agree on what to discuss in trade talks added to the pressure.

Economists from UBS say the trade war is impacting the global economy.

“Despite headlines that go back and forth, two facts have become more and more clear over time. First, the trend is toward escalation, not de-escalation. Second, the cost of the uncertainty accumulates as time goes on without resolution, weighing on both the domestic and global economies,” they said in a note to clients.

A rocky August sent the Dow Jones Industrial Average DJIA, +1.33% down by 1.7%, the S&P 500 SPX, +1.59% 1.8% lower and the Nasdaq Composite COMP, +2.26% down by 2.6%.

In currency markets, both the euro EURUSD, -0.32% and British pound GBPUSD, +0.01% came under pressure amid weak readings of manufacturing output, as well as heightened tensions over the possibility of a no-deal U.K. exit from the European Union.

Ahead of a raft of U.S. economic data this week, one positive sign came as the Caixin China manufacturing purchasing managers’ index rose above the 50 mark for the first time in three months. But the official Chinese manufacturing PMI fell slightly to 49.5.

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