Stocks fell on Tuesday, the first trading day of the month, after the world’s two largest economies began imposing new tariffs on each other’s goods. Weak manufacturing data also dented investor sentiment.

The Dow Jones Industrial Average traded 333 points lower, or 1.3%. The S&P 500 lost 0.7% along with the Nasdaq Composite.

Equities hit their session lows after the Institute for Supply Management said U.S. manufacturing activity contracted last month for the first time since early 2016.

The U.S. imposed 15% tariffs on a variety of Chinese goods on Sunday, while China imposed new charges on U.S. products from Sept. 1. It marked the latest escalation in their long-running trade war.

Chipmakers such as Nvidia and Skyworks Solutions fell 1.2% and 2.2%, respectively. Boeing and Caterpillar both declined more than 2% while Apple lost 1.7%. Boeing was also under pressure after a report said the 737 Max jet could remain grounded through the holiday season.

Investors loaded up on traditionally safer assets such as gold and long-dated Treasurys. Gold futures for December delivery traded 1.8% higher at $1,556.60 per ounce. The 30-year Treasury bond yield traded at 1.93% after hitting an all-time low last week.

It’s “every country for themselves. The month of September begins with global uncertainty perhaps at its recent highs,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities. “September will very likely set the tone for the remainder of this year and perhaps then some.”

Both countries have imposed tariffs on billions of dollars worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment.

President Donald Trump has said officials from both sides were still planning to meet later this month, despite rising tensions.

On Monday, Beijing filed a complaint against Washington at the World Trade Organization over U.S. import duties. China claimed the latest round of tariffs violated a consensus reached by leaders of both countries in Osaka, Japan.

Trade tensions between China and the U.S. ratcheted up last month, contributing to solid declines in August. The major indexes had their worst monthly performance last month since May. The Dow and S&P 500 lost 1.7% and 1.8%, respectively, in August. The Nasdaq dropped 2.6% last month.

Brexit uncertainty

Investors were also rattled by the fallout of Britain’s constitutional crisis over Brexit.

U.K. lawmakers return from a summer recess on Tuesday, with a cross-party group of MPs (members of parliament) expected to apply for an emergency debate and seize control of the agenda of the House of Commons.

The move is an attempt to stop a so-called “no-deal” Brexit on October 31, which is seen by many inside and outside of parliament as a “cliff-edge” scenario to be avoided at all costs.

Prime Minister Boris Johnson could call for a snap general election if opposition lawmakers vote against a no-deal Brexit this week.

Sterling fell below $1.20 on Tuesday morning, reaching levels not seen since October 2016.

On the data front, manufacturing Purchasing Managers’ Index (PMI) figures for August will be released at around 9:45 a.m. ET. The Institute for Supply Management’s (ISM) manufacturing index for August and construction spending data for July will be released slightly later in the session.

CNBC’s Sam Meredith contributed to this report.

By: Fred Imbert