Dow drops 572 points as stocks close with losses amid trade war fears

U.S stocks closed with steep losses Friday amid growing fears of a trade war between the U.S. and China.

The Dow Jones industrial average closed 572 points lower, a 2.3 percent decrease, while the Nasdaq and S&P 500 index dropped 2.3 percent and 2.2 percent, respectively.

All three indexes opened with steep losses Friday following President TrumpDonald John TrumpTrump threatens ex-intel official's clearance, citing comments on CNN Protesters topple Confederate monument on UNC campus Man wanted for threatening to shoot Trump spotted in Maryland MORE’s latest threat of more tariffs on China. The Dow opened more than 240 points lower, a 1 percent drop, while the Nasdaq fell 0.9 percent and the S&P index dropped 0.8 percent.

Some of those losses were gained back in minutes, with the Dow down just 150 points 10 minutes after opening. But the drop resumed shortly thereafter as traders searched for clarity on trade with tensions quickly escalating between the U.S. and China.

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Trump announced Thursday night that his administration would consider imposing $100 billion more in tariffs on Chinese goods. He said in a Friday morning interview that tariffs targeting China could cause some "pain" in the U.S. economy, but promised that America would emerge stronger as a result.

The Chinese government responded Friday, saying it would "dedicate itself to the end and at any cost and will definitely fight back firmly."

U.S. businesses have been bracing for the impact of tariffs and have urged Trump to tread carefully with protectionist trade policies. Retailers say rising prices for imports would hurt vulnerable consumers, while major U.S. industrial and agricultural exporters fear losing crucial business in China.

The Dow at one point lost as more than 700 points while the Nasdaq and S&P 500 index were down 2.6 percent and 2.7 percent each.

Trump’s top economic advisers have sought to temper fears of a trade war, calling the president’s actions part of an effort to reach fairer trade terms with China.

Treasury Secretary Steven MnuchinSteven Terner MnuchinPolicy expert: Erdoğan wants to ramp up anti-American sentiment to distract Turkish public Harriet Tubman on the bill would be smart for the president, his party and the nation Turkish president blasts ‘economic coup’ amid heightened tensions with US MORE said that was the "potential of trade war with China" but added that he is  cautiously optimistic that we will be able to work this out."

"Right now we have initiated a plan. The tariffs will take some period of time to go into effect," Mnuchin told CNBC. "There will be public comment, while we're in the period before the tariffs go on. We'll continue to have discussions."

White House National Economic Council Director Larry Kudlow told a group of reporters at the White House that the U.S. may provide a list of suggestions to China,” adding that resolving the trade dispute between Washington and Beijing is “eminently doable.”

While Kudlow insisted that "we are not in a trade war,” he told Bloomberg earlier Friday that talks between the two countries “have not really begun.”

“Perhaps there will be some fruitful negotiations, but I would say they have been unsatisfactory, so we will see,” said Kudlow.

Updated at 5:01 p.m. Jordan Fabian contributed.