The S&P 500 and tech-heavy Nasdaq also fell close to 1%.
In a statement, Trump said he had US Trade Representative Robert E. Lighthizer, to draw up a list of $200 billion in Chinese products that will be hit with tariffs of 10 per cent if China refuses his demands to narrow the yawning American trade deficit and change its industrial policies.
Investors are also assessing the impact of tightening monetary policy by central banks after the US Federal Reserve raised interest rate last week and the European Central Bank said it planned to end its bond-purchase program at year-end.
USA companies, from Caterpillar to Qualcomm, would likely face obstruction from regulators in China, a market they rely on for an outsize share of sales.
Stocks are ending mostly higher Wednesday, although the Dow Jones industrials are posting a seventh straight loss due to weakness in McDonald's and Travelers.
Chicago Board of Trade front month soybean futures settled down 2.1 percent after falling as much as 7.3 percent, to the lowest spot price on a continuous chart since December 2008.
Sixty-two percent of companies in all industries said they had less favourable market access in China than their Chinese competitors had in Europe. Boeing and Caterpillar fell more than 3% apiece.
And U.S. companies have an increasingly sizable stake in the fast-growing Chinese market. Search engine Baidu declined 3.6 percent to $259.30.
"The trade war waged by the USA is against both the law of the market and the development trend of today's world".
Japan's Nikkei lost 1.8 percent, South Korea's KOSPI retreated 1.3 percent while Australian stocks bucked the trend and added 0.1 percent helped by a depreciating currency and an overnight bounce in commodity prices.
Leslie Grantham, who played 'Dirty' Den in EastEnders, has died aged 71
Grantham is survived by his ex-wife, Jane Laurie, and three sons. "They will not be making any statements to the media". Grantham's management, Advocate Agency, says he died Friday, June 15, 2018 but did not disclose the cause of death.
U.S. Secretary of State Mike Pompeo affirmed that China was committed to working with the U.S. on sanctions last week. Asian stocks had been poised for a mixed start to trading that sees Chinese markets reopen for the first time since trade tensions with the USA escalated.
The S&P 500 index is rising 8 points, or 0.3 percent, to 2,771.
China might be unable to match the USA tariffs because it imports much less from the United States - $130 billion in goods previous year, compared with Chinese exports to the United States of $505.5 billion.
The Canadian government believes a deal to update NAFTA is still possible despite a US move to impose tariffs on Canadian and Mexican steel and aluminum, Foreign Minister Chrystia Freeland said in Ottawa on Tuesday.
Initially, 545 USA products valued at $34 billion will be targeted by China, mimicking the Trump administration's tariff rollout.
"If the United States loses its senses and comes up with a new list, China will be forced to strike back hard, and launch comprehensive measures that match the U.S. move in quantity and quality", the Chinese Commerce Ministry said in a statement Tuesday.
The Canadian dollar weakened to a one-year low of C$ 1.3237 overnight, before paring some of its losses, as investors anxious about Canada's trade feud with the United States.
In U.S. Treasuries, U.S. 10-year and 30-year yields fell to three-week lows, while two-year yields slid to two-week troughs.
Shanghai-based hedge manager David Dai said the rapidly escalating trade tensions between Washington and Beijing have added woes to an already fragile stock market and make calling the bottom very hard.
Last week, Mr Trump confirmed that the U.S. would impose 25% tariffs on $50bn worth of Chinese goods. That's after China and the US both levied a 25 percent tariff on $50 billion worth of goods.