© Reuters. Traders work on the floor at the NYSE in New York

By Amy Caren Daniel

(Reuters) – Wall Street was set to open sharply lower on Monday after President Donald Trump in a surprising move threatened to hike tariffs on Chinese goods this week, reigniting fears of a global slowdown and shattering a period of relative calm in markets.

Trump said on Sunday tariffs on $200 billion worth of Chinese goods would increase to 25% from 10 percent, reversing a decision he made in February to keep them at 10 percent as the two sides made progress on trade talks.

The Wall Street Journal reported China was considering canceling a round of U.S. talks set for this week in the wake of Trump’s comments, but China said on Monday a delegation is still preparing to go to the United States.

Of the 30 components, 29 were down premarket. Boeing (NYSE:) Co, the single largest U.S. exporter to China, fell 2.7%, while chipmakers, which get a good portion of their revenue from China, tumbled.

“I don’t think it was done so flippantly to suggest Trump will not follow through with it, but there is an element of it being a negotiation tactic,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

“These things are used as an excuse for investors to take profits because we have had such an enormous rally and valuations are relatively high and the impetus was on news to continue to be good and obviously this is not welcome news.”

Investors stepped back from riskier assets as hopes of a deal have helped markets surge this year, with the and the Nasdaq indexes hitting record highs last week.

Wall Street’s fear gauge, the , spiked to its highest level in nearly two months.

At 7:57 a.m. ET, were down 479 points, or 1.81%. were down 47.75 points, or 1.62% and were down 158.5 points, or 2.02%.

Semiconductor stocks Nvidia Corp, Micron Technology Inc (NASDAQ:) and Intel Corp (NASDAQ:) fell between 2.2% and 4%.

Marquee names such as Apple Inc (NASDAQ:), Amazon.com Inc (NASDAQ:), Alphabet (NASDAQ:) Inc, Microsoft Corp (NASDAQ:) and Netflix Inc (NASDAQ:) were down between 1.7% and 2.7%.

Automakers General Motors Co (NYSE:) declined 2.7%, while Ford Motor (NYSE:) dropped 2.5%. Tesla (NASDAQ:) Inc slipped 1.9%, also weighed down by U.S. trade officials rejecting the company’s bid for relief from tariffs on the Chinese-made Autopilot “brain” of its Model 3 and other electric vehicles.

In a bright spot, Anadarko Petroleum Corp (NYSE:) rose 2.6% after Occidental Petroleum Corp (NYSE:) increased the cash component of its $38 billion bid, removing a requirement for any deal to receive the approval of Occidental’s shareholders.

Occidental is trying to convince Anadarko to accept its offer and abandon the agreed $33 billion sale to Chevron Corp. (NYSE:) The oil major was up 0.2%, the only gainer among Dow components.

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