Major U.S. stock indexes held firm after the U.S. raised tariffs on more than $200 billion in Chinese goods to 25 percent from 10 percent.

Analysts still worry that the mounting trade dispute between the world's two largest economies could stunt growth.

President Donald Trump insisted tariffs will make the U.S. "much stronger."

Stocks erased earlier losses after the U.S. more than doubled tariffs on Chinese goods, although investment analysts warn that deteriorating relations between the world's two largest economies could hurt global growth.

"A trade war, with across-the-board tariffs on U.S.-China trade, would push the global economy towards recession," economists with Bank of America Merrill Lynch warned in a note to investors.

The Dow fell more than 300 points in morning trade before recovering to close up 114 points, or 0.4 percent, at 25,942. The broader S&P 500 stock index and tech-heavy Nasdaq also reversed losses and edged up on the day. Stocks have sunk this week after President Donald Trump and U.S. trade officials said China was reneging on commitments to change their trade policies.

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The U.S. on Friday raised tariffs on $200 billion in Chinese imports to 25 percent from 10 percent. Mr. Trump also said levies could jump on an additional $325 billion in products, which would effectively cover all goods the U.S. buys from China, including electronic products, apparel and other products.

"Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch! In the meantime, China should not renegotiate deals with the U.S. at the last minute," Mr. Trump said in a tweet.

Oxford Economics estimates that the tariff hike on Chinese imports will reduce U.S. economic output by $62 billion by next year, or 0.3 percent of GDP. China has vowed to retaliate to the higher tariffs. Talks between U.S. and Chinese trade officials were scheduled to continue Friday.

Critics of Mr. Trump's more protectionist trade policies warn they could hurt American consumers and businesses as well as hinder U.S. economic growth.

"This is ugly. The tariffs imposed last night are a tax on U.S. companies and consumers, not the Chinese," said Carl Weinberg, chief international economist with High Frequency Economics, in a report. "U.S. consumers will continue to buy stuff from China because there are not alternative sources for most of it."

Despite the mounting tensions with China, the trade fight could still be resolved quickly -- even before the new tariffs are collected, Goldman Sachs analysts said.