Wall Street realizes the trade war is real

Stocks on Monday had their worst day since January. The Dow Jones Industrial Average fell 618 points, while the S&P 500 dropped 2.4% and the Nasdaq closed down 3.4%.

Why it matters: The stock market has largely ignored potential threats of a U.S.-China trade deal falling through. That changed today when China announced it would retaliate against U.S. actions by raising tariffs to 25% on $60 billion worth of U.S. imports (effective June 1).

What to watch: President Trump backed off his initial threat to tax everything else the U.S. imports from China ($325 billion worth of goods), telling reporters that he "hasn't made a decision" on that yet.

• Trump also said he plans to meet with Chinese president Xi Jinping next month at the G20 summit, potentially opening the door for some sort of salvo between the two nations.