Peter Navarro, one of President Donald Trump's top trade advisors, said the market was overreacting to fears the administration would restrict foreign investment as part of its trade actions against China and other countries.

Navarro told CNBC that the administration currently does not have any specific countries targeted. His comments came after news reports that had Wall Street reeling over the prospect that the U.S. could prevent companies that had at least 25 percent Chinese ownership from buying businesses that possessed "industrially significant technology."

"There's no plans to impose investment restrictions on any countries that are interfering in any way with our country. This is not the plan," he said.

Navarro's statement seemed to counteract much of the talk that the U.S. was ready to take another step in its trade regime, and his comments brought stocks well off their lows for the day. The Dow Jones Industrial Average still closed down nearly 300 points.

He insisted that markets were taking the wrong message from the reports, saying that investors instead should be focused on the White House's efforts to protect American exports and on the general progress in the economy.

"I would say more broadly I think today's market reaction is a very large overreaction," Navarro said. "What we have here with Trump trade policy is a tremendous success for this country and this market. It's very bullish."

Earlier in the day, Treasury Secretary Steven Mnuchin put out a tweet that indicated the administration won't focus its restriction efforts solely on China but on all countries. That sent the market to its lows of the day, a nearly 500-point drop in the Dow on a day when volatility spiked.

Navarro sought to tamp down the implication that Trump was looking for widespread restrictions.

"The only thing that's going to happen in the near term is on Friday the Treasury secretary is going to report to the president on the issue related to China. That's all that's going to happen," he said. "With respect to other countries, there's absolutely nothing on the table."

However, White House press secretary Sarah Huckabee Sanders later seemed to contradict Navarro, saying that other countries are being eyed.

"As the secretary said, a statement will go out that targets all countries that are trying to steal our technology," Sanders told reporters at her daily briefing. "We expect that to be out soon. We'll keep you posted."

— CNBC's Jacob Pramuk contributed to this report.