Stocks dropped on Monday as the trade war between the United States and China escalated, with China announcing a retaliatory tariff hike on U.S. imports. The S&P 500 index closed down 2.41% and the Dow Jones Industrial Average lost 2.38%, their worst day in four months.

China’s announcement on Monday morning followed a U.S.-imposed tariff hike on Friday on $200 billion of Chinese goods. Late Monday, the U.S. began laying the groundwork to impose tariffs on an additional $325 billion in Chinese imports—essentially, the remainder of goods that the United States imports from China.

Although the government is seeking to fast-track the process, which includes a public-comment period, the additional tariffs “likely won’t be in place before mid to late summer,” says Michael Townsend, Schwab’s vice president of legislative and regulatory affairs.

The White House scrambled Monday to balance tough talk aimed at China with reassurance to U.S. investors that talks with China had not broken down. Treasury Secretary Steven Mnuchin said Monday that talks were ongoing and that he planned to return to Beijing in the coming weeks for further negotiations. Late Monday, Trump announced that he would meet face-to-face with Chinese President Xi Jinping on the sidelines of the G-20 summit, scheduled for June 28-29 in Osaka, Japan.