The Dow Jones saw a steep drop of 700 points after a threat from Beijing to slap new tariffs on billions of dollars in American goods, and a harsh response from US President Donald Trump, but picked up before ending 621 down.

The precipitous fall in the Dow on Friday came after China unveiled its response to Washington’s latest tariffs, vowing to impose penalties on $75 billion in American products. President Trump responded in a volley of tweets slamming Beijing for underhanded trade practices, and threatened to cut off all business ties with the country, sending markets further into panic.

“We don’t need China and, frankly, would be far better off without them,” the president tweeted, adding that American firms should start “looking for an alternative to China.”

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The president also singled out Federal Reserve Chairman Jay Powell, asking whether the chairman or Chinese President Xi Jinping was a “bigger enemy” to the United States.

President Trump and White House trade advisor Peter Navarro have blamed the Federal Reserve for sluggish growth, arguing that the institution has raised interest rates “too far too fast.” The president repeated that criticism on Friday.

During times of recession, the Federal Reserve lowers interest rates to encourage borrowing and stimulate economic activity, however holding rates too low risks the creation of a “bubble” of unsustainable growth.

After markets closed, Federal Reserve vice chairman Richard Clarida told CNBC that “global issues” are driving down US treasury yields, but assured that he does not believe there is immediate risk of recession.

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The Dow saw its worst tumble in a single day in 2019 last week, with an 800 point drop, reversing previous gains accrued after Washington indicated it would delay additional sanctions on Chinese goods from September to the end of the year.

Beijing previously urged Washington not to make good on its tariff threats and to find a way to resolve the trade dispute, but also warned that it would retaliate to any new American levies.

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