Investors had managed to cling on to optimism that the ‘trade skirmish’ between the US and China would reach a swift conclusion – and that the US would ultimately be better off, as China would be forced to curtail practices like its IP theft from US companies.

But as downbeat markets observed on Monday morning, a hope of a harmonious resolution died when Beijing canceled plans to send two delegations to Washington. The delegates would have engaged in the fifth round of talks since the trade conflict – war, whatever you want to call it – began earlier this year.

Meanwhile, the US formally imposed 10% tariffs on roughly $200 billion in Chinese goods just after midnight on Monday morning, pushing China to impose tariffs on roughly $60 billion of goods. Even before the tariffs took effect, US stock futures and the yuan tumbled after the start of trading Sunday night, leading European and Asian stocks lower (to be sure, these moves took place with holidays in China, Japan and South Korea, which led to much thinner trading volumes).

Those losses were exacerbated when Beijing-run Xinhua newswire published a white paper where Chinese officials revealed that they would not engage in any further negotiations while the US continues to threaten further tariffs, per Bloomberg.

“The door for trade talks is always open but negotiations must be held in an environment of mutual respect,” according to a white paper carried by the state-run Xinhua News Agency. Negotiations “cannot be carried out under the threat of tariffs.”

This confirms that “the trade war is now a reality,” according to Fitch chief economist Brian Coulton.

But to make matters more complicated, traders woke up on Monday to a new piece by Axios claiming that the Trump administration is planning to unveil “a major, ‘administration-wide,’ broadside against China” during the coming weeks. The broadside will reportedly include revelations of further Chinese malfeasance regarding China’s “hostile actions” against the public and private sector involving China’s “cyber attacks, election interference and industrial warfare (the Trump administration’s term for China’s IP theft practices).”