Stocks close with steep losses as Trump, China escalate trade war

Stocks closed with steep losses Friday after President TrumpDonald John TrumpTrump conversation with foreign leader part of complaint that led to standoff between intel chief, Congress: report Pelosi: Lewandowski should have been held in contempt 'right then and there' Trump to withdraw FEMA chief nominee: report MORE pledged to retaliate against a new round of Chinese tariffs on U.S. goods.

The Dow Jones industrial average closed with a loss of 2.4 percent, a 623-point drop, while the Nasdaq composite and S&P 500 ended Friday down 3 percent and 2.6 percent respectively.

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Markets were on track for solid gains Friday morning until China announced it would impose tariffs of 5 percent to 10 percent on $75 billion in imports from the U.S. The new tariffs follow Trump’s decision earlier this month to levy a 10-percent import tax on more than $300 billion in Chinese goods.

Trump responded to Beijing’s new tariffs in a series of tweets by teasing another round of retaliation and ordering U.S. businesses to seek alternatives to operating and manufacturing products in China.

“The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing … your companies HOME and making your products in the USA,” Trump tweeted, though it is dubious if he has the power to command such a move.

“I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States,” he tweeted.

Trump also pressed FedEx, UPS, Amazon and the U.S. Postal Service to boost their efforts to identify and halt shipments of the opioid fentanyl from China. The president’s tweets sunk shares of FedEx, UPS and Amazon, along with major tech companies and other firms with business in China.

While Friday stock selloff was driven largely by Trump's escalating trade war, the president joked on Twitter that the decline was due to the departure of Rep. Seth MoultonSeth MoultonYoung insurgents aren't rushing to Kennedy's side in Markey fight Wall Street ends volatile month in major test for Trump The Hill's Morning Report — Hurricane headed for Florida changes Trump's travel plans MORE (D-Mass.) from the 2020 Democratic presidential primary.

"The Dow is down 573 points perhaps on the news that Representative Seth Moulton, whoever that may be, has dropped out of the 2020 Presidential Race!" Trump tweeted less than an hour before the closing bell.

The Dow fell another 50 points after Trump's tweet before trading ended at 4 p.m.