While the reaction in US stocks was muted, global equities were rattled. Markets are wondering if Trump's threats are mainly a negotiating tactic.

While China could offset American tariffs by letting its currency fall, that might endanger Beijing’s recent efforts to stabilize the economy.

Trump issued the tariff threat on Monday while criticizing a surge in illegal migration, despite data showing apprehensions at the southern U.S. border are near a four-year low. Apprehension figures at the Canadian border remain significantly lower by comparison.