About 15 minutes into trading, the Dow Jones Industrial Average was at 26,149.07, down 0.4 percent.

The broad-based S&P 500 also slid 0.5 percent to 2,909.84, while the tech-rich Nasdaq Composite Index fell 0.6 percent to 7,944.74.

China's tariff announcement came just before a widely-anticipated speech by Federal Reserve Chair Jay Powell that is expected to offer clues on the likelihood of further interest rate cuts.

Beijing's punitive tariffs target $75 billion worth of US imports and will range from 5 percent to 10 percent on 5,078 items, China's state council tariff office said.

Beijing also announced it will impose a 25 percent tariff on US autos and a 5 percent tariff on auto parts starting December 15.

China had vowed action after President Donald Trump earlier this announced tariffs on $300 billion in Chinese imports, levies that will take effect in September and December.

Powell, meanwhile, is due to address an annual central banker gathering in Jackson Hole, Wyoming. The Fed last month cut interest rates for the first time in more than a decade.

Futures markets expect another rate cut in September, but some regional Fed presidents on Thursday expressed reticence about cutting interest rates again so soon.

Among individual companies, cloud computing company Salesforce surged 5.6 percent as it lifted its full-year revenue forecast after a 22 percent jump in second-quarter sales to $4.0 billion.

Hasbro dropped 5.7 percent after announcing it will acquire Entertainment One for $4.0 billion in cash, a purchase that includes the "Peppa Pig" and "PJ Masks" brands.