The tariffs were quickly matched by China on USA exports, a move that drew the president's ire.
Given the escalating rhetoric on trade, some investors said the slide in US stocks was relatively small.
In addition to the second set of tariffs, the USA president also threatened to hit China with a third wave of measures - an additional 10% on another $200 billion worth of Chinese goods - if China rolled out its own tariffs.
Navarro said USA officials planned to cushion against the blows to American industries and workers in the United States and present in China but declined to elaborate on any plans to help the U.S. farming sector. Combined, the potential tariffs on Beijing could cover $450 billion - a sum equal to 89 percent of Chinese goods imported to the United States past year.
The trade confrontation pits the world's two largest economies against each other and could disrupt global supply chains for the tech and auto industries, sectors heavily reliant on outsourced components.
The bid to save NAFTA comes as the fear of a global trade war continues to grow, fuelled by the Trump's administration's plan to impose new tariffs on China that target $200 billion worth of goods.
Among the day's losers, the yuan weakened to 6.491 to the dollar in the offshore market, the lowest in five months.
The Dow Jones Industrial Average .DJI fell 287.26 points, or 1.15 percent, to 24,700.21, the S&P 500 .SPX lost 11.18 points, or 0.40 percent, to 2,762.57 and the Nasdaq Composite .IXIC dropped 21.44 points, or 0.28 percent, to 7,725.59.
Yields on safe-haven US Treasuries narrowed.
US President Donald Trump's former campaign chairman Paul Manafort sent to jail
They said that if the prosecution would reveal who the witnesses are, Manafort could be ordered not to make contact with them. Jackson said she "struggled with this decision", but ultimately Manafort "abused the trust" placed in him by the court.
"If the US becomes irrational and issues this list, China will have no choice but to adopt strong countermeasures of the same amount and quality", the Chinese Commerce Ministry said.
"In a global trade war, no matter how you spin tariffs, retailers and the American families that we serve are the losers", said Hun Quach, vice president, worldwide trade, for the Retail Industry Leaders Association.
Trump has raised trade tensions on other fronts as well. The US leader warned Friday of "additional tariffs" should Beijing hit back with tit-for-tat measures.
Adding to already deep tensions, the Trump administration released a scathing report late Tuesday in Washington that accused China of pursuing policies that threaten United States economic and national security. Some believe Mr Trump is bluffing, contrary to Mr Navarro's comments.
Set to an unflattering picture of Trump with his hair flying in the wind, the WeChat account of the ruling Communist Party's People's Daily said China had the confidence and the ability to win the trade battle. "I suspect that we are not going to cause the economies to collapse", Mr Blankfein added.
Trump is pressing Beijing to scrap or roll back technology development strategies its trading partners say include stealing or pressuring companies to give up know-how in violation of its market-opening commitments.
Mr Trump's comments came hours after the top United States diplomat accused China of engaging in "predatory economics 101" and an "unprecedented level of larceny" of intellectual property. "We have very good relationships with Canada".
Beijing has mounted campaigns against Japanese and South Korean companies in the past after diplomatic disputes.
A free trade deal that Canada signed with the European Union, however, would effectively erase duties on most European footwear imports like Italian shoes. The President threatened to impose even more tariffs if China retaliates further.
Beijing had agreed to buy goods worth $70 billion and to invest more in United States infrastructure if Washington agreed to withdraw its tariffs.
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