Wall Street stocks tumbled early Tuesday after fresh US sanctions on Chinese companies dimmed expectations for a breakthrough in this week's trade talks.
Analysts cited the Commerce Department's announcement late Monday adding 28 Chinese government and commercial organizations to a list that face US export restrictions because of human rights violations against Uighurs and Muslim minorities in China.
China blasted the US action as "groundless."
"These accusations are nothing more than an excuse for the United States to deliberately interfere in China's internal affairs," said Foreign Ministry spokesman Geng Shuang.
The move comes two days ahead of the resumption of high-level trade talks between China and the United States in Washington that had raised hope for progress in the long-running trade war.
About 15 minutes into trading, the Dow Jones Industrial Average stood at 26,217.37, down one percent.
The broad-based S&P 500 shed 1.1 percent, falling to 2,906.95, while the tech-rich Nasdaq Composite Index declined one percent to 7,873.84.
Among individual companies, Boeing fell 1.4 percent on worries that the grounding of the 737 MAX plane could be extended following two deadly crashes.
The company was also sued by pilots from Southwest Airlines, who accused Boeing of "deliberately misleading" them.