U.S. stocks dropped on Thursday, with each of the major Wall Street indexes suffering its biggest one-day percentage drop in six weeks, on the heels of an action by President Donald Trump to impose tariffs on up to $60 billion of Chinese imports.

The Dow Jones Industrial Average fell 723.45 points, or 2.93 per cent, to 23,958.86, the S&P 500 lost 68.23 points, or 2.52 per cent, to 2,643.7 and the Nasdaq Composite dropped 178.61 points, or 2.43 per cent, to 7,166.68.

Canada's main stock index ended sharply lower on Thursday, registering its biggest daily percentage drop since September 2016, following Trump's China announcement.

The Toronto Stock Exchange's S&P/TSX composite index fell 275.35 points, or 1.76 percent, to 15,399.93. 

U.S. MARKETS

President Donald Trump took the biggest economic gamble of his presidency, ordering tariffs on Chinese goods in a move that could escalate already tense trade relations between the world’s two biggest economies. Stocks plunged, led by Boeing Co (BA.N).

The president instructed U.S. Trade Representative Robert Lighthizer to levy tariffs on at least US$50 billion in Chinese imports. Trump signed an executive memo issuing the instructions on Thursday at the White House. Within 15 days, USTR will come up with a proposed list of products that will face higher tariffs.

The prospect of a trade war sent markets plummeting, with the Dow Jones Industrial Average down 724 points, almost 3 per cent, its biggest U.S. stocks slumped on Thursday as President Donald Trump's move to impose tariffs on up to US$60 billion of Chinese imports drove fears about the impact on the global economy, fueling the biggest per centage declines in Wall Street's three major indexes since they entered correction territory six weeks ago.

Trump signed a presidential memorandum that will target the Chinese imports only after a consultation period. China will have space to respond, reducing the risk of immediate retaliation from Beijing.

But after equities recovered somewhat from earlier lows, selling pressure resumed on Wall Street heading into the close as investors fretted over the potential scale of U.S tariffs and possible impact on global trade.

"There's too much negative sentiment right now," said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston. "It's possible that it will be rough sledding for a while. I donRt see anything on the horizon that will reassure people that things are just great."

Major industrials slumped. Plane maker Boeing Co lost 5.2 per cent, Caterpillar Inc (CAT.N) dropped 5.7 and 3M Co (MMM.N) lost 4.7.  The three were among the biggest drags on the Dow Jones Industrial Average. The S&P industrials sector plunged 3.28 per cent.

The losses suffered by the U.S. indices marked the biggest daily per centage drop for each of the major indexes since Feb. 8, when the Dow and S&P confirmed a market correction from their Jan. 26 highs.

Selling was broad, with only the defensive utilities 0.44 on the plus side, up 0.44 per cent, out of 11 major S&P sectors.

The CBOE Volatility Index, the most widely followed barometer of expected near-term volatility in the S&P 500, finished up 5.48 points at 23.34, its highest close since Feb. 13.23.34

U.S. treasury prices gained as investors sought out safe havens. Benchmark 10-year notes last rose 23/32 in price to yield 2.8244 per cent, from 2.907 per cent late on Wednesday.

The drop in yields weighed on financial stocks, which were down 3.70 per cent, making them the worst performing of the major sectors.

Another decline in shares of Facebook Inc (FB.O), down 2.7 per cent, continued to weigh on the broader market and the tech sector, the best performing S&P group for this year. The S&P technology index fell 2.69 per cent on fears of greater regulation in the wake of the Facebook data leak.

Facebook Chief Executive Mark Zuckerberg said he was open to additional government regulation and happy to testify before the U.S. Congress.

AbbVie Inc (ABBV.N) tumbled 12.8 per cent after the drugmaker said it would not seek accelerated approval for its experimental lung cancer treatment based on results from a mid-stage study.

Declining issues outnumbered advancing ones on the NYSE by a 4.51-to-1 ratio; on Nasdaq, a 4.09-to-1 ratio favored decliners.

The S&P 500 posted three new 52-week highs and 19 new lows; the Nasdaq Composite recorded 36 new highs and 59 new lows.

Volume on U.S. exchanges was 7.77 billion shares, compared to the 7.17 billion average for the full session over the last 20 trading days. drop in six weeks. Shares in Boeing dropped more than 5 per cent.

The U.S. will impose 25 per cent duties on targeted Chinese products to compensate for the harm caused to the American economy from China’s policies, according to a fact sheet released by USTR. The proposed product list will include items in aerospace, information and communication technology and machinery. USTR will announce the proposed list in the next “several days,” according to the fact sheet.

“This has been long in the making,” Trump said, adding that the tariffs could affect as much as USUS$60 billion in goods. “We have a tremendous intellectual property theft situation going on” with China affecting hundreds of billions of dollars in trade each year, he said.

As he signed the tariffs order, Trump told reporters, “This is the first of many.”

The move prompted a sharp rebuke from China.

“We don’t want a trade war but we are not afraid of it,” said China’s ambassador to the U.S., Cui Tiankai. “If somebody tries to impose a trade war on us, we will certainly fight back and retaliate. If people want to play tough, we will play tough with them and see who will last longer.”

Policy makers across the world are warning of a brewing trade war that could undermine the broadest global recovery in years. Meanwhile, business groups representing companies ranging from Walmart Inc. to Amazon.com Inc. are warning U.S. tariffs could raise prices for consumers and sideswipe stock prices.

CANADIAN STOCKS

The TSX energy index was down 2.4 per cent and among sectors with the biggest declines on the day following a decline in oil prices.

The TSX posted three new 52-week highs and nine new lows. Across all Canadian issues there were 11 new 52-week highs and 40 new lows.

The largest percentage gainer on the TSX was New Flyer Industries Inc (NFI.TO), which rose 4.5 per cent, while the largest decliner was Eldorado Gold Corp (ELD.TO), down 11.1 percent.

Among the most active Canadian stocks by volume were Bombardier Inc (BBDb.TO), up 0.5 percent to $3.78; Aurora Cannabis Inc (ACB.TO), down 4.5 percent to $9.63 and Eldorado Gold.