By Sruthi Shankar
President Donald Trump said in a statement that a 25 percent tariff would be imposed on an initial list of strategically important imports from China from July 6 and vowed further measures if Beijing struck back.
In response, China's Commerce Ministry said it planned to impose tariff measures of similar size and intensity. Beijing has published its own list that target $50 billion in U.S. goods, including soybeans, aircraft, and autos and chemicals.
Boeing, the single largest U.S. exporter to China, fell 1.7 percent, dragging the Dow lower for the fourth day in a row.
Construction equipment maker Caterpillar slipped 1.6 percent and agricultural trader Bunge dropped 3 percent.
Global financial markets have struggled since February in the face of signs Washington and Beijing were headed toward a trade war after several rounds of negotiations failed to resolve U.S. complaints over Chinese industrial policy, market access and a $375 billion trade gap.
"It has gotten investors nervous," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "It's going to probably mean a cautious and bumpy ride for the stock markets."
Investors are also weighing the impact of tightening monetary policy by central banks on the equities market.
The U.S. Federal Reserve increased its key interest rate for the second time this year on Wednesday and hinted at the possibility of two more hikes by the end of 2018.
The European Central Bank weighed in on Thursday to say it would end its bond-purchase program at year-end, even if any interest rate hike was still distant.
At 9:51 a.m. ET the Dow Jones Industrial Average was down 140.43 points, or 0.56 percent, at 25,034.88, the S&P 500 was down 10.06 points, or 0.36 percent, at 2,772.43 and the Nasdaq Composite was down 38.09 points, or 0.49 percent, at 7,722.95.
NXP Semiconductors rose 3.1 percent after a media report that Beijing had already approved Qualcomm Inc's proposed $44 billion acquisition of the chipmaker. Qualcomm was up 0.6 percent. Sources close to the talks have told Reuters that China is yet to approve the deal.
Adobe shares dropped 3.2 percent, the biggest percentage decliner on the S&P 500, after the company projected third-quarter revenue that fell slightly below estimates.
Declining issues outnumbered advancers for a 2.27-to-1 ratio on the NYSE and for a 1.90-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and two new lows, while the Nasdaq recorded 37 new highs and 16 new lows.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)