China markets were the worst hit, with the Shanghai composite sinking 1.78 percent to close at 2,777.20. The index had closed higher for its third consecutive session on Tuesday after a recent bout of weakness took the benchmark into bear market territory — referring to a fall of at least 20 percent from recent highs — where it currently remains in.

The goods on the U.S. government's list would be subject to 10 percent tariffs, according to a statement from U.S. Trade Representative Robert Lighthizer , who said his office will proceed with a public notice and comment period before the levies are officially imposed.

Markets in Asia closed steeply lower on Wednesday, with most major indexes tumbling following the release of a list of an additional $200 billion in Chinese goods on which the U.S. is considering imposing tariffs.

The smaller Shenzhen composite tumbled 1.96 percent at the close, while the Nasdaq-style Chinext index plunged 2.04 percent and the blue-chip CSI 300 index fell 1.74 percent.

Hong Kong's Hang Seng Index fell 1.76 percent by 3:21 p.m. HK/SIN, moderating somewhat after earlier losing more than 2 percent. The materials sector led losses in the afternoon, with the index's other sectors all trading lower in the afternoon.

Meanwhile, Japan's Nikkei 225 declined 1.19 percent to close at 21,932.21 as trade-sensitive stocks, such as automakers, dropped: Honda Motor was down 1.04 percent and Nissan dropped 2.06 percent. Most other sectors traded lower with losses in the afternoon.

Elsewhere, the Kospi edged down by 0.59 percent as South Korean exporters took a hit amid broad-based declines. Hyundai Motor declined 1.62 percent and tech heavyweight Samsung Electronics lost 0.65 percent.

Over in Australia, the slid 0.68 percent, with the energy, materials and utilities sectors recording the largest declines.

MSCI's index of Asia Pacific shares outside of Japan tanked 1.08 percent in Asia morning trade amid the sharp turn in sentiment on Wednesday.

U.S. stock index futures were in negative territory on the news. The implied open for the Dow Jones Industrial Average futures was nearly 150 points lower at of 12:13 a.m. ET. The implied open for the S&P 500 and Nasdaq were also in the red.

"The problem is, we don't know where this is going in the future. That could hit business investment, it could hit employment creation and it could damage confidence as we're seeing in the financial markets a bit this morning," Erik Norland, senior economist at CME Group, told CNBC's "Squawk Box."

The latest news on the trade front comes after the U.S. tariffs on $34 billion in Chinese goods took effect on Friday, a move against which China swiftly retaliated. U.S. President Donald Trump last week said an additional $500 billion could potentially face tariffs.

"Risks have multiplied, no doubt, and there's been a convergence of these risks: generalized Chinese slowdown, the trade friction escalation and at the same time, a continuous increase in the U.S. rates ... Consequently, we have turned slightly less positive, slightly less constructive than we were," Manishi Raychaudhuri, Asia Pacific equity strategist at BNP Paribas, told CNBC's "Capital Connection."

On Tuesday, the Dow rose 0.58 percent, or 143.07 points, to close at 24,919.66 — the index's fourth consecutive session of gains. The S&P 500 edged up by 0.35 percent to 2,793.84 and the Nasdaq composite finished higher by 0.04 percent at 7,759.20.

The advance on Wall Street came as corporate earnings season rolled around. Analysts polled by FactSet expected S&P 500 second-quarter earnings to have grown by 20 percent.

— CNBC's Fred Imbert contributed to this report.