Major exporters including chemical companies and machinery makers took sharp losses. Technology companies also fell, while banks dropped along with interest rates and some weak second-quarter results hurt retailers.
According to Bloomberg, the administration could impose the 25 percent tariffs as soon as a public review period ends next week, but it could simply announce the tariffs and say they will take effect later.
China has threatened to retaliate with tariffs on $60 billion in goods from the U.S. and could take other measures as well.
Stocks were coming off a four-day surge that brought them to record highs as the U.S. appeared to make progress in trade talks with Mexico and Canada.
The S&P 500 index lost 12.91 points, or 0.4 percent, to 2,901.13. The Dow Jones Industrial Average fell 137.65 points, or 0.5 percent, to 25,986.92. The Nasdaq composite slid 21.32 points, or 0.3 percent, to 8,088.36.
The Russell 2000 index of smaller-company stocks dipped 2.40 points, or 0.1 percent, to 1,732.35.
Construction equipment maker Caterpillar fell 2 percent to $139.06. Gold and copper miner Freeport-McMoRan lost 3.5 percent to $14.15 and steel producer Nucor slid 2 percent to $62.79. General Motors fell 2 percent to $36.36.
Discount retailer Dollar Tree plunged 15.5 percent to $79.78 after its quarterly profit and sales fell short of Wall Street projections. Investors were also concerned about the company’s forecast for the rest of the year. Competitor Dollar General slipped 1 percent to $105.66 after it said its profit margins dipped.
Argentina’s peso plunged to another record low. The country’s central bank raised its primary interest rate to 60 percent, highest in the world, to try to stop the sharp decline in the national currency. The peso fell more than 50 percent this year.
The Argentine Merval index jumped 5.2 percent after president Mauricio Macri said Wednesday that he is asking the International Monetary Fund for the early release of $50 billion in rescue funds for Argentina.
Other emerging market stock indexes, including those in Brazil and Mexico, took losses.
Oil prices rose. Benchmark U.S. crude gained 1.4 percent to $70.25 a barrel in New York, while Brent crude, added 0.8 percent to $77.77 a barrel in London. Wholesale gasoline rose 1.8 percent to $2.14 a gallon. Heating oil rose 0.3 percent to $2.25 a gallon. Natural gas added 0.4 percent to $2.87 per 1,000 cubic feet.
The yield on the 10-year Treasury bond fell to 2.86 percent from 2.88 percent. That hurt banks, as lower yields mean long-term loans are less profitable.
Gold fell 0.5 percent to $1,205 an ounce. Silver sank 1.5 percent to $14.59 an ounce. Copper lost 0.7 percent to $2.71 a pound.
The dollar fell to 111.05 yen from 111.69. The euro fell to $1.1663 from $1.1699.
Germany’s DAX was down 0.5 percent and the CAC 40 in France shed 0.4 percent. The FTSE 100 index fell 0.6 percent.
Japan’s benchmark Nikkei 225 added 0.1 percent while the Kospi in South Korea dropped 0.1 percent. Hong Kong’s Hang Seng was 0.9 percent lower.