The US tariff threat, which sparked broad selling on equity and commodity markets, added to recent pressure on soybeans linked to expectations that US farmers will switch some areas from corn to soybeans.
Corn, which rallied last week as rain hampered planting in the US Midwest, also fell sharply on Monday, as the renewed trade tensions between Washington and Beijing cooled hopes of a deal that would boost US grain exports to China.
US wheat futures also fell on Monday.
Trump said on Sunday that tariffs on $200 billion of goods would increase to 25 percent on Friday, reversing a decision he made in February to keep them at 10 percent due to progress in trade talks.
The president also said he would target a further $325 billion of Chinese goods with 25 percent tariffs "shortly," essentially covering all products imported into the United States from China.
"It took just a couple sentences to get all that damage done on the markets," said Jack Scoville, a futures market analyst at the Price Futures Group.
The announcement, which Trump posted on his Twitter account on Sunday, soured expectations that the sides were near an agreement to resolve a trade standoff, although China said on Monday that a delegation was still preparing to go to the United States for a new round of talks.
Chicago soybean futures dropped sharply as the US market opened on Monday, but then recovered slightly from new contract lows later in the morning on technical buying.
"The market has always had this feeling that we're going to get a deal done with China," Scoville said. "But today, I think we're seeing what would happen to this puppy if we don't - and it's really ugly."
Chicago Board of Trade (CBOT) July soybeans were down 12-1/4 cents at $8.30 a bushel at 11:13 a.m. CDT (1613 GMT), after hitting a contract low of $8.16-3/4 earlier on Monday.
The slump added yet another negative note for soybeans in what has been weeks of woe: On Friday, the contract was down 2.9 percent in the week.
Soybeans are the most valuable US agricultural export to China, which had been the top buyer of US soybeans prior to the trade war. Pledges by Beijing to increase imports of US farm goods had raised expectations it would also start buying significant amounts of US corn and wheat.
In midday trading on Monday, CBOT July wheat was down 3/4 cent to $4.62-1/2 a bushel, while CBOT July corn futures were down 6-3/4 cents at $3.64 a bushel.
Corn broke an eight-session rally on Monday that had been fueled by concerns over lost plantings and reduced yield potential due to excess moisture this spring.
More rain is expected around the US Midwest this week, which could further hamper corn planting and raise the chances of some land being switched to later-planted soybeans.
Traders were awaiting the US Department of Agriculture's weekly crop progress report later on Monday to gauge the extent of planting delays.