Markets dropped precipitously on Friday amid fears of a growing trade war between the United States and China.

The Dow Jones Industrial Average fell more than 700 points as White House press secretary Sarah Huckabee Sanders insisted years of Chinese policies were to blame for the tit-for-tat tariffs imposed by the world’s largest two economies against one another were.

The Dow recovered slightly before the end of the trading end, falling 572 points.

Trump administration officials insisted there was no trade war even as trade groups in Washington and GOP lawmakers expressed alarm at the back and forth.

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“We are not in a trade war,” insisted White House chief economic advisor Larry Kudlow, who before joining the administration served as a longtime CNBC host and was seen as a free-trade advocate.

“What this is is an attempt to right some of the wrongs with respect to China,” he said.

The sense that the trade war was intensifying mounted Thursday when President Trump Donald John TrumpBubba Wallace to be driver of Michael Jordan, Denny Hamlin NASCAR team Graham: GOP will confirm Trump's Supreme Court nominee before the election Southwest Airlines, unions call for six-month extension of government aid MORE surprised observers by announcing a possible expansion of U.S. tariffs on Chinese goods by $100 billion. Trump had previously announced $50 billion in tariffs on Chinese goods as a response to intellectual property concerns in China, and $3 billion in tariffs on aluminum and steel imports.

“It makes us nervous, for sure,” said Aaron Low, senior vice president of regulatory and government affairs at the Auto Care Association, a group that advocates on behalf of the auto repair industry.

China has already announced retaliation for the first $53 billion in U.S. tariffs, and could be expected to respond to the next $100 billion if it is implemented — though this would nearly equal total U.S. exports to China.

American Chemistry Council (ACC) President and CEO Cal Dooley, a former Democratic congressman from California, said the tariffs amounted to misguided economic policy.

“When we have the administration implementing import tariffs primarily targeted at some of the less competitive industries, what we’re seeing is retaliation against the most competitive industries, the ones that are growing and creating jobs,” he said.

Republicans have scrambled to find a middle ground between Trump’s aggressive trade sense, which is opposed to the party’s free trade orthodoxy, and supporting the president who is still popular among the party’s base.

“This is not the way I would do it, throw the hand grenade in the middle of the room and count the bodies,” he said Rep. Bill Flores William (Bill) Hose FloresPatient Protection Pledge offers price transparency Texas GOP lawmaker calls for 'carbon neutral' but 'energy dominant' future OVERNIGHT ENERGY: Biden calls climate change one of America's four major crises | National parks chief says coronavirus staff shortages shouldn't prevent access | Trump hits California officials over wildfires MORE (R-Texas) in an interview for WTAW radio. “But it’s working,” he added.

Others have been more critical. Senate Finance Committee Chairman Orrin Hatch Orrin Grant HatchBottom line Bottom line Senate GOP divided over whether they'd fill Supreme Court vacancy MORE (R-Utah) said that while the U.S. needed to address trade challenges head on, “we cannot exacerbate these challenges with self-inflicted harm.”

The expanding list of potential tariffs is opening the possibility that China would find new ways to strike back at the U.S.

China only imported $130 billion-worth of American goods in 2017, according to the U.S. Census Bureau. As a result, if Trump expands his tariff list to $150 billion, China would not be able to match the threat using tariffs alone.

“We could see complications arise in terms of foreign exchange and the Chinese currency reaction, plus the possibility of China selling off some of its treasury holdings. That has negative growth implications,” said Goldman Sachs chief U.S. political economist Alec Phillips.

By making its currency artificially cheap, as it has done in the past, China could lower the dollar price of both Chinese goods and American tariffs, while making American goods more expensive for Chinese consumers.

If the country decides to sell off some of its massive collection of U.S. debt, a move that likely would be seen as a major escalation, China could tighten the financial market in the U.S., though it would risk lowering the value of the remaining American debt it owns.

The Asian giant could also seek to make it difficult for U.S. financial, travel and other services industries to operate in China. The U.S. has a $38 billion trade surplus in services.

China has criticized Trump for the sanctions, and has sought to close ranks with the European Union, which has also criticized Trump over steel and aluminum tariffs imposed on imports around the globe.

“China and the EU... should take a clear stance against protectionism, jointly preserve the rules-based multilateral trade order, and keep the global economy on a sound and sustainable track,” said Zhang Ming, the head of the Chinese mission to the EU, according to AFP.

According to the report, European Commission spokesman Daniel Rosario only reiterated the belief that “free and fair trade is one of the most powerful engines for growth, supporting millions of jobs and contributing to prosperity.”