Trump also threatened on numerous occasions to put punitive tariffs on the entirety of Chinese imports to the U.S. if Beijing enacted retaliatory measures in response to Washington's latest round of duties on US$200 billion of Chinese goods.
The Dow Jones Industrial Average slumped 245.39 points, or 1 percent, to 24,442.92. Some early gains for tech and Internet stocks also faded.
If the new duties are imposed, all imports from China would be subject to USA tariffs.
The Russell 2000 index of smaller-company stocks slipped 6.51 points, or 0.4 percent, to 1,447.31.
With the initial market reaction, Wall Street came under a heavy selling pressure and Nasdaq was last seen down 1.26% on the day while the DJIA and the S&P 500 indexes were losing 0.25% 0.05%, respectively.
US President Donald Trump has warned that his administration will impose additional tariffs on China if the 2 countries fail to reach a deal on trade.
The pan-European STOXX 600 index rose 0.01 percent.
The S&P 500 is down 32.36 points, or 1.2 percent. Microsoft shed 2.9 percent to $103.85. The online retailer also tumbled Friday after it reported weak sales and gave a lower-than-expected revenue estimate for the quarter that includes the holiday shopping season. Facebook edged higher in after-hours trading following its report. The Nasdaq has dropped 13% from its August 29 record high.
The trade spat between Washington and Beijing escalated in April after the United States slapped 25- and 10-percent tariffs on steel and aluminum imports, respectively, from China.
The list would apply to the imports from China that aren't already covered by previous rounds of tariffs-which may be $257 billion using last year's import figures, according to two of the people.
It's fair to wonder whether Trump even wants to make a deal.
"More than 70 percent of American firms operating in the South of China, consider the suspension of further investment in the country and move some or all of their production facilities to other countries, because trade war hits profits", reports Reuters.
The Tuesday rally was welcomed by US stock investors on edge after largely stellar earnings have failed to provide sustained relief to selling that began amid concern that rising rates will crimp economic growth.