Stocks around the world have plunged as investors feared that a trade conflict between the US and China would escalate.
A second day of big losses pushed US stocks to their worst week in two years.
As of Friday afternoon, China’s only response to the tariffs President Donald Trump announced this week was to say it would defend itself.
But investors are concerned tensions will keep rising, and that a round of sanctions and retaliation will affect the global economy and corporate profits.
The Chinese government said it might place tariffs on a $3 billion list of US goods such as pork, apples and steel pipes. That was a response to the tariffs on steel and aluminium imports that Mr Trump announced earlier this month.
The losses were widespread and technology companies were pummelled. They have made enormous gains over the last year, but since they do so much business outside the US, investors see them as particularly vulnerable to the effects of a trade dispute.
Stocks sagged at the start of this month after the tariffs on aluminium and steel were announced, but they quickly recovered as the administration said the tariffs would not be as severe as they first looked.
“There could be a possibility of a bounce back if, as this progresses, both sides look like they’re negotiating,” said Lisa Erickson, chief investment officer at US Bank Wealth Management. “There could be further decline if people get a sense there could be more trade restrictions in place.”
The S&P 500 index dropped 55.43 points, or 2.1%, to 2,588.26. The index skidded 6% this week, its worst since January 2016.
The Dow Jones industrial average lost 424.69 points, or 1.8%, to 23,533.20. The Nasdaq composite fell 174.01 points, or 2.4%, to 6,992.67.
Banks also took steep losses as interest rates decreased. They had climbed earlier this week after the Federal Reserve raised interest rates, but then tumbled after the tariffs were proposed.
If the tariffs and counter-tariffs reduce economic growth in the US, the Fed is likely to raise rates at a slower pace.
The sanctions Mr Trump proposed on Thursday could affect as much as $60 billion in imports and are a response to allegations Beijing steals or forces foreign companies to hand over technology.
Big US companies tend to get more of their revenue from foreign customers than small companies do, and that makes them more vulnerable to damage from a trade war. With nearly 1.4 billion people, China is a big market for the largest US businesses.
Not every company set out how much of its revenue comes from abroad, but FactSet estimates that 30.5% of revenue at big companies in the S&P 500 comes from outside the United States.
For the smaller companies in the S&P 600 index, it’s just 19.5%. Smaller companies are also getting a bigger benefit from the recent cut in corporate tax rates.