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10-year Treasury yield hits its highest level since May

U.S. Treasury yields rose sharply Tuesday after the United States and China each slapped a new round of tariffs on each other.

President Donald Trump's administration said Monday announced it will impose 10 percent tariffs on about $200 billion of imports from China effective Sept. 24.

China, in turn, said it will institute new tariffs on U.S. goods worth $60 billion on Sept. 24. according to a Reuters report.

The yield on the benchmark 10-year Treasury note rose 5 basis points to 3.055 percent at 4:29 p.m. ET, its highest level since May 23. The yield on the 30-year Treasury bond picked up 6 basis points to climb to 3.2 percent. Bond yields move inversely to prices.

China's holdings of U.S. Treasury bills, notes and bonds dropped to a six month low of $1.171 in July, from $1.178 trillion in June. China is the biggest holder of U.S. Treasurys, followed by Japan.

Japan's holdings rose to 1.04 trillion from $1.03 trillion in June.

Treasury selling is often viewed as a way Beijing could retaliate against the Washington, but bond strategists are skeptical China is really trying to send a message.

U.S. Markets Overview: Treasurys chart

Market jitters escalated in the last 24 hours, as trade relations between the U.S. and China took a turn for the worse.

The latest round of tariffs comes after National Economic Council Director Larry Kudlow told CNBC's Becky Quick that President Donald Trump had "not been satisfied" with the state of trade talks between Washington and Beijing.

Following the news, China responded to the fresh tariffs stating that it had no choice but to retaliate, in order to safeguard its rights and interest in a free trade world. This latest developments come about a week after news circulated that the U.S. was seeking to reignite trade discussions with China.

Meanwhile, the President and First Lady Melania Trump are set to welcome Polish President Andrzej Duda and First Lady Agata Kornhauser-Duda to the White House for their first official visit.