Dow falls 500 points, S&P 500 slides 1.5% on trade worries
The Dow Jones industrial average fell 500 points, with Boeing and Caterpillar as the biggest decliners in the index. The S&P 500 declined 1.5 percent, with industrials as the worst-performing sector. The Nasdaq composite dropped 1.5 percent.
"This is truly a reaction to China," said JJ Kinahan, chief market strategist at TD Ameritrade. "What we've seen with this administration is a trend of a big statement, followed by everyone getting riled up, and then a pragmatic solution is found."
"Cooler heads may prevail moving forward," Kinahan said.
U.S. stock futures plunged on the news, while global stock markets fell. China's Commerce Ministry said Friday the country will not hesitate to react with a "major response to the new tariffs from the U.S.
Trump later tweeted on Friday: "China, which is a great economic power, is considered a Developing Nation within the World Trade Organization. They therefore get tremendous perks and advantages, especially over the U.S. Does anybody think this is fair. We were badly represented. The WTO is unfair to U.S."
Shares of large-cap tech companies also fell. Apple and Amazon both declined more than 2 percent, while Netflix dropped 0.7 percent after briefly trading higher.
Stocks came off their lows in midday trading after an official from Mexico's economic ministry said the person was "very convinced" a new deal on NAFTA will be reached soon.
The move lower in stocks also follows the release of much weaker-than-expected jobs data. The Labor Department reported the U.S. economy added 103,000 jobs in March. Economists polled by Reuters expected a gain of 193,000.
"I'd call this one a mixed bag. The headline number may disappoint but there's more than meets the eye," said Mike Loewengart, vice president of investment strategy at E-Trade, noting that wages improved and unemployment remains at historically low levels.
"For investors, today's report may be a tough one to swallow when coupled with a trade standoff that seems to be intensifying with each passing day," Loewengart said.
Investors pored over the data to looking for any indications as to how the U.S. is performing and what this means for the Federal Reserve when it comes to the future path of raising interest rates.
Scott Clemons, chief investment strategist at Brown Brothers Harriman, said the Fed is still on track to raise rates a total of three times this year. However, an increase in trade tensions complicates matters for the central bank.
"The Fed does not want to be in the business of disruption," he said. "On the other hand, tariffs can be inflationary. That puts the Fed between a rock and a hard place."