U.S. stocks are losing ground in afternoon trading Monday as the Trump administration steps up pressure on trading partners to make deals before punishing tariffs imposed by the U.S. take effect.

The S&P 500 was down 1.2% in the first day of trading in the U.S. after a holiday-shortened week. The benchmark index remains near its all-time high set last week.

The Dow Jones Industrial Average was down 641 points, or 1.4%, as of 2:32 p.m. Eastern time, and the Nasdaq composite was 1.3% lower.

Decliners outnumbered gainers by more than 5-to-1 on the New York Stock Exchange.

Tesla tumbled 7.4% for the biggest drop among S&P 500 stocks as the feud between CEO Elon Musk and President Donald Trump reignited over the weekend. Musk, once a top donor and ally of Trump, said he would form a third political party in protest over the Republican spending bill that passed last week.

The selling accelerated after the Trump administration released letters informing Japan and South Korea that their goods will be taxed at 25% starting on Aug. 1, citing persistent trade imbalances with the two crucial U.S. allies in Asia.

“If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge,” Trump wrote in the letters to Japanese Prime Minister Shigeru Ishiba and South Korean President Lee Jae-myung.

Trump told reporters over the weekend that his administration would send letters to several foreign governments as early as Monday spelling out their tariff rates if they don’t reach a deal before Wednesday — the culmination of a 90-day negotiating period set by the White House during which goods from most countries have been taxed at a baseline 10%.

He also said on Sunday that he would impose an additional 10% in tariffs against the BRICS bloc of developing nations, which had condemned tariffs increases at its summit in Brazil. In addition to Brazil, the BRICS countries also include Russia, India, China and South Africa.

With the 90-day pause in U.S. tariffs against a long list of nations set to expire, the threat of more severe tariffs hangs over the global economy once again.

“Just bringing back that meaty topic back into focus, after a strong week last week, has given a little bit of a pause in the market,” said Bill Northey, senior investment director at U.S. Bank Asset Management.

The near-term outlook will likely hinge on several key factors like the extent to which trading partners are included in Trump letters, the rate of tariffs, and the effective date of such tariffs, according to analysts at Nomura.

Last week, the Trump administration announced that it reached a deal with Vietnam that would allow U.S. goods to enter the country duty-free, while Vietnamese exports to the U.S. would face a 20% levy. That was a decline from the 46% tax on Vietnamese imports he proposed in April.

“The type of deal struck with Vietnam may be a blueprint for similar countries in the region with economies heavily reliant on large trade deficits with the U.S.,” said Jason Pride, chief of investment strategy and research at Glenmede.