Stocks have recovered after opening with steep losses Wednesday morning amid an escalation of trade tensions between the U.S. and China.

The Dow Jones industrial average opened close to 500 points lower Wednesday morning, a roughly 2 percent drop. The S&P 500 index and Nasdaq each opened 1.4 percent lower, while industrial and materials sector stocks took the heaviest losses.

Markets rebounded by Wednesday afternoon, with all three indexes posting gains by with a little more than an hour before trading closes. The Dow was up 0.17 percent while the Nasdaq and S&P increased roughly 0.8 percent and 0.6 percent each.

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The selloff came after the U.S. announced a proposal for $50 billion in tariffs on Chinese goods Tuesday night. China responded Wednesday morning with their own $50 billion in levies on U.S imports, stoking investor worries.

Dow futures fell close to 500 points before Wednesday’s open, implying a major loss once trading began at 9:30 a.m. S&P futures fell 1.3 percent after hours, while Nasdaq futures dropped 1.6 percent.

It's the latest market dive seemingly triggered by 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’s tariffs and the retaliation they’ve drawn from U.S trade partners. Stocks also took heavy losses on Monday, when China announced tariffs on 128 U.S. goods in response to Trump’s steel and aluminum tariffs. That helped send the Dow 459 points lower on Monday.

President Trump said Wednesday morning on Twitter that the U.S. is not in a trade war with China, and accused past U.S. presidents of "foolish" trade policies that "lost" the trade war against China years ago.

"When you’re already $500 Billion DOWN, you can’t lose" Trump wrote, incorrectly citing the U.S's $375 billion trade deficit with China. Analysts say the trade deficit does not reflect other aspects of the U.S. and China's economic relationship and shouldn't be used as the sole measure of trade fairness between the countries.

Trump economic officials sought to contain some of the fallout on Wall Street by insisting the tariffs would do little harm to the U.S. economy and could be weakened, if not eliminated.

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Commerce Secretary Wilbur Ross Wilbur Louis RossTrump 'very happy' to allow TikTok to operate in US if security concerns resolved TikTok, WeChat to be banned Sunday from US app stores The Hill's Morning Report - Sponsored by National Industries for the Blind - Trump seeks to flip 'Rage' narrative; Dems block COVID-19 bill MORE, charged with imposing and defending the tariffs, said Wednesday that China’s tariffs could cost the U.S. 0.3 percent of its gross domestic product.

“So, it's hardly a life-threatening activity," Ross told CNBC. "It's relatively proportionate to the tariffs we put on based on the intellectual property."

And National Economic Council Director Larry Kudlow told reporters that the tariffs could be a negotiating tactic and may never be imposed, though he warned that Trump should be taken "seriously" on the issue.

Updated at 3:23 p.m.