Wall Street stocks tumbled amid renewed trade war fears on Tuesday, joining other leading bourses in selling off amid signs Washington and Beijing are moving further from an agreement.

The Dow Jones Industrial Average fell 1.8 per cent to 25,965.09. The broad-based S&P 500 shed 1.7 per cent to 2,884.05, while the tech-rich Nasdaq Composite Index dropped 2.0 per cent to 7,963.76.

Hopes the United States and China can seal a trade deal took a hit over the weekend when President Donald Trump threatened to raise tariffs on Chinese imports as of Friday.

Beijing has decided to proceed with key trade talks later this week but the White House now says US duties on USD 200 billion in Chinese merchandise will more than double on Friday.

Investors have generally viewed the Trump threats as a bargaining tactic. Still, Tuesday's pullback suggested some fear the latest back-and-forth could pose a more serious obstacle.

"The new tariffs have caught the market off guard," said Quincy Krosby, chief market strategist of Prudential Financial.

"The question becomes, What will the Chinese do?" Industrials were a hard-hit sector, with Caterpillar, United Technologies and 3M all losing more than 2.0 per cent.

Technology companies also fell, with Apple, Microsoft and Facebook all losing more than two per cent. Among individual companies, drug maker Mylan plunged 23.8 per cent after reporting disappointing first-quarter sales and skepticism over some of the company's forecasts.