Materials, industrials and consumer discretionary stocks also plummeted.
Meanwhile, the US Commerce Department reported that in March the trade deficit with China had hit a three-year low, with US exports to China rising while imports, such as mobile telephones, fell.
Asian stocks were down overnight, with Japan's Nikkei 225 retreating almost 1 percent and Hong Kong's Hang Seng down 2.4 percent.
Trade with China supports seven million jobs in the United States, out of 39 million U.S. jobs related to worldwide trade.
The Trump administration raised duties from 10% to 25% on £155 billion of Chinese imports.
"Those are all United States companies who are suddenly facing a 25% increase in cost, and then you have to remember that the Chinese are going to retaliate".
The Global Times article read, "China does not want to fight a trade war, but it is not afraid of it". This can escalate beyond tariffs.
China's top trade negotiator, Vice Premier Liu He, is supposed to begin another round of talks on Thursday with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
U.S. stock futures fell and Asian shares pared gains after the announcement.
"The most likely outcome - to which we assign a probability of 70% - sees both sides concluding a deal, albeit at perhaps a slightly delayed timeframe", said Jack Siu, senior investment strategist at Credit Suisse in Hong Kong.
Price pressures have remained moderate despite a strong economy and the tightening labor market.
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The Reds won 4-0 at Anfield, with Divock Origi scoring the victor from Trent Alexander-Arnold's quick corner, to overturn a 3-0 first-leg deficit.
Beijing retaliated for previous tariff hikes by raising duties on $110 billion (£85 billion) of American imports.
Trump's recent threats have undoubtedly hurt the market with the Dow falling more than 2% this week and economists warning that USA consumers will pay if the tensions continue or escalate.
The S&P500 futures were down 3.0%, the Shanghai index down 6.3%, the Nikkei 4.5% and ex-Japan Asia MSCI 4.3%. "We've taken well over $100 billion from China in a year". "When they look at the import-export numbers they were shocked", Trump said on Thursday.
Perhaps alluding to the United States' criticisms of China's intellectual property theft and ongoing negotiations that have sought to pin down an enforcement mechanism to ensure the Chinese regime curbs such theft, the editorial chastised the administration for "suppressing China's science and technology innovation".
"President Trump faces a political battle selling a China deal as being worthwhile".
For 10 months, China has been paying Tariffs to the U.S. of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods.
It stood just about two basis points above the three-month bill yields, which stood at 2.424 percent.
The head of a Washington, D.C. -based trade research firm said the existing tariffs have raised expenses for an average US family of four by $767 each year and cost 934,000 jobs nationwide.
In currencies, the yen had surged to a three-month high against the dollar and the Swiss franc was at a three-week high as investors anxious about an escalating trade conflict. The euro strengthened to $1.1230 from $1.1216.
Trump has also referenced the economy in behind-the-scenes conversations with aides, pointing to its strength as evidence that they were wrong to condemn his trade policy from the start, according to a Republican official with knowledge of trade conversations.
Brent was down 0.1% to $70.30 a barrel while U.S. West Texas Intermediate (WTI) crude fell 0.1% to $61.67.
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