Stock market gains made late Monday and early Tuesday fizzled by Tuesday afternoon as the White House levied more tariffs on China.

The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average surged early, but their gains largely disappeared by Tuesday afternoon. The S&P 500 ended about 0.2% up on the day and the Nasdaq at around 0.4% up. The Dow Jones is up just 0.2% after jumping by over 1,300 points earlier in the day, according to Yahoo Finance.

The United States and China escalated a trade war on Tuesday. The Trump administration previously planned to increase tariffs on China by 34% on Wednesday because of the “Liberation Day” duties Trump had announced last week. On Tuesday, the White House announced that it is planning an additional 50% hike on Chinese goods after Beijing threatened its own tariffs in response.

“Countries like China, who have chosen to retaliate and try to double down on their mistreatment of American workers, are making a mistake,” White House Press Secretary Karoline Leavitt said on Tuesday. “President Trump has a spine of steel, and he will not break.”

Stocks initially rebounded late Monday and early Tuesday as the White House touted the number of countries who had reached out to the United States to strike new trade deals to avoid “Liberation Day” tariffs. Several countries, such as Japan and Israel, have already begun negotiations to avoid the tariffs announced by the White House last week.

“Countries from all over the World are talking to us. Tough but fair parameters are being set. Spoke to the Japanese Prime Minister this morning. He is sending a top team to negotiate!” Trump posted on Truth Social on Monday morning, presaging the rebound in the stock market.

After Trump’s post, Japan’s Nikkei stock index closed up 6% on Monday. U.S. Treasury Secretary Scott Bessent is set to lead negotiations with Japan over tariffs.

Industry in Japan and the United States received other good news on Monday when Trump signed an executive action reopening the possibility of a deal for Japan’s Nippon Steel to purchase U.S. Steel. The agreement was initially blocked by former President Joe Biden in January.

Trump, though initially against the deal, appeared to warm to an agreement in February. On Monday, he ordered his administration to take a fresh look at an agreement and determine whether it presents risks to United States national security.