The Standard & Poor's 500 dropped almost 2.2 percent, while the NASDAQ fell almost 2.3 percent at the end of trading.
In a speech yesterday, Trump said "in light of China's unfair retaliation", he had instructed trade officials to "consider whether US$100 billion of additional tariffs would be appropriate".
China's state media has rallied against the United States, warning its trade protectionism actions would end in defeat and that the only option now was to hit the USA hard enough so it would "remember the pain".
US President Donald Trump responded on Twitter to Beijing's tariff plans, saying America was not in a trade war with China, but that it had a trade deficit of US$500 billion a year and "intellectual property theft of another US$300 billion". They therefore get tremendous perks and advantages, especially over the U.S. Does anybody think this is fair. President Donald Trump upped the ante late Thursday with a threat to slap tariffs on a further $100 billion of Chinese exports. We were badly represented. The Trump base is soon to find out that its leader's policies will increase the cost of just about anything it buys, that capital inflow will decrease and the expansion of USA industry will slow, and jobs will be lost rather than created.
When asked about the tensions over trade now brewing with China, Trump said the USA had already lost. "But thankfully, we have a president that's willing to actually stand up, be tough, and take some really courageous and bold action, like President Trump has done", she said.More news: Routine release for Salman Khan: VVIPs above law?
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Senator Chuck Grassley said China had ignored the rules of the World Trade Organization (WTO) for too long and aggressively pursued practices that unfairly undermine American ownership, innovation and entrepreneurship.
Financial markets have swung wildly over the past few days in response to fears of escalating trade tensions between the world's two biggest economies.
The US on Tuesday published a list of US$50 billion in Chinese imports set to be hit by US tariffs.
US stocks also were affected this past Monday by Trump's new verbal attack on giant online retailer Amazon.