Stocks gave back early gains to close lower on Tuesday while U.S. Treasury yields fell as investors anticipate slowing global economic growth given the trade war with China.

Both the U.S. and China raised tariffs on billions of dollars worth of each other’s goods earlier this month and the rising tensions have pushed the benchmark S&P 500 index down more than 4 percent so far in in May.

Ten-year U.S. Treasury yields fell to 2.26 percent, their lowest levels since October 2017, after President Donald Trump on Monday said during a visit to Japan that the U.S. was "not ready" to reach a trade deal with China.  U.S. tariffs on goods from China “could go up very, very substantially, very easily,” Trump added.

Morgan Stanley economists said U.S. economic growth will be undermined, forcing the Federal Reserve to lower interest rates, if the trade war is not settled soon. “If talks stall, no deal is agreed upon and the US imposes 25 percent tariffs on the remaining $300 billion of imports from China, we see the global economy heading towards recession,” the bank said in a research note.

Similarly, JPMorgan CEO Jamie DimonOpens a New Window. on Tuesday voiced concern about the consequences of an ongoing trade war.  “Trade has gone from being a skirmish to being far more important than that,” Dimon said during Deutsche Bank’s Financial Services Conference in New York. “If this goes south in a bad way, and you have other surprises, that could be part of the thing that changes confidence, changes peoples’ willingness to invest,” he said. Read more at FOX Business