Meanwhile, a magazine reported U.S. President Donald Trump was now focused on pushing German cars from the country.

COMMENTS:

ZHIWEI REN, MANAGING DIRECTOR AND PORTFOLIO MANAGER, PENN MUTUAL ASSET MANAGEMENT, HORSHAM, PENNSYLVANIA

"This is another negotiation tactic on the U.S. side because there are other negotiations going on. U.S. wants to use tariffs as a bargaining tool for other negotiations. I think, it's very important to have a long term view and not to over trade in this kind of environment."

"Though the risk for businesses is, they have to plan supplies and where they want to sell for the next six to ten months -- and how can they do it in this kind of environment?"

"And that's why people are buying small caps. The small caps are immune to all those global events and everyone knows that the U.S. economy is doing well. And FAANG, people know these companies will grow no matter what."

SEAN SIMKO, HEAD OF GLOBAL FIXED INCOME MANAGEMENT, SEI, OAKS, PENNSYLVANIA

“As of now, the market is taking this in stride. It’s still early in a process. I’m surprised we haven’t seen more of a knee-jerk reaction. This will prolong and complicate NAFTA renegotiation over the summer. It throws a wrench in the mix. This will keep a cap on yields in the Treasuries market and keep the curve flattener trade in vogue.

"Investors will see how this will develop in the coming months and quarters to gauge the impact from the retaliations and whether the governments will take it to the next level on restriction on global trade.

"The news on a trade war has been circulated for the last six months. We have positioned accordingly since the beginning of the year. We are looking as safe-haven assets as a backup. But we haven’t added Treasuries with 10-year yield now back below 3 percent in the recent rally. We continue to hold credit but we are selective with what we are buying. We still see value in investment-grade credit. We are not making significant changes to our portfolios now with today’s headlines.”

CHUCK CARLSON, CHIEF EXECUTIVE OFFICER AT HORIZON INVESTMENT SERVICES IN HAMMOND, INDIANA

“Whether it’s trade or whether it's international relations, it’s one day it’s this, next day it’s that. We’re just going to have to get used to living in that world if that’s how the White House maneuvers and negotiates things. This is just part of the negotiation. I would think the market at this point would start to realize that.”

“There’s an added issue here though in the market with tariffs that maybe wasn’t there six months ago.... Are we are starting to see chinks in the international growth story? If that is the case, lobbing tariffs into the mix is not going to be helpful to that economic growth story, not just for the U.S. but also internationally.”

“There is a little bit more potential negative coming from this that people are starting to do a read through, in terms of we are re-evaluating the economic growth story overseas, and these added tariffs continue to put pressure on that story.”

“What it means for the market is it plays more into the hands of a trading mentality as opposed to an investing mentality."

“Participants are looking for things to trade off of and we’re through the earnings season basically.”

DANIEL KATZIVE, HEAD OF FX STRATEGY NORTH AMERICA, BNP PARIBAS, NEW YORK

“On balance, adjusted trade measures are usually seen as negative for the USD because it’s seen as lying on a continuum with preference for a weaker currency. But it can also have an impact on the risk environment and the economic outlook in other countries which makes things complicated.”

AARON KOHLI, INTEREST RATE STRATEGIST, BMO CAPITAL MARKETS, NEW YORK

“So far it's ironically not getting as much attention as it should. People are so focused on a lot of the European theatrics…people are really missing this notion that one of the problems with our trade negotiation right now is we’re not tackling these things one at a time, there’s a lot of correlation between the outcomes. So if you’re going to take a hard line with Canada its very unlikely you’ll take a softer line with Europe, and that means that the impact is going to be much more binary than I think people expect. Its’ not just a conflict with one or two or three it’s with all of them at once.

"I think there’s a lot more in the trade conflict than people realize. The potential for spot shortages, the potential for near-term inflation spikes, all of that is there in a very strong way and in a way that’s difficult to quantify right now.

"There’s a lack of clarity about whether it will be pushed through and it seems at least on the political front in the U.S. … it’s not quite as fixed as the headlines make it seem. Some of those sanction headlines are just posturing, it’s not pure substance. Making it difficult to handicap comes from that kernel of how reliable is this? Is it Wilbur Ross talking, or Steve Mnuchin, or Peter Navarro? Who knows who’s policy is front and center right now. That makes the trade part of this harder to handicap and fully appreciate.”

KEN POLCARI, DIRECTOR OF THE NYSE FLOOR DIVISION AT O’NEIL SECURITIES IN NEW YORK

“I’m not making anything big of the tariff stuff again, it is not something that is coming out of left field – we’ve been talking about it, (Trump) has been threatening about it, he is going to do it, he’s not going to do it. Now he is going to do it. The market is half expecting it, which is why you are not seeing this real massive selloff in the market. I do think (the S&P) will try to find some stability at support at 2,710, which is more the short-term support, and it will hold it today. I don’t think this is any reason for the market to selloff the way it did on Tuesday after the Italian thing came out because a lot of what came out over the weekend in Italy was stuff the market was not prepared for. The tariff thing the market is prepared for. People understand it, whether or not they appreciate it, or the market appreciates it, I don’t think it will cause the market to selloff, though. The market will remain weak today like this, it will test 2,710 and I think it will hold."

JIM O’SULLIVAN, CHIEF U.S. ECONOMIST, HIGH FREQUENCY ECONOMICS, VALHALLA, NEW YORK

“At the end of the day, there will be some changes to NAFTA. Exactly how we get there we are not sure. There have been some jitters from trade. We are probably going to see a jump in the national manufacturing survey tomorrow. We have already seen that with the regional surveys. Trade remains a risk but it doesn’t look like there will be major trade war. The U.S. economy can deal with some tariffs. There might be more strength without the trade threat. At this point, the Fed is looking at this as a source of downside risk, but it has not become a major threat. The message from jobless claims is that the labor market is still improving.”

MARKET REACTION:

STOCKS: The S&P 500 .SPX was down 0.30 percent in early trade and the Dow .DJI was down 0.69 percent. However, the Nasdaq .IXIC showed a 0.09 percent gain.

BONDS: Ten-year U.S. treasury bond yields were down slightly at 2.8350 percent.

FOREX: The dollar index .DXY was off 0.07 percent. The dollar was near flat against the euro EUR=, which stood at $1.1662. The Mexican peso MXN= weakened by more than 1 percent against the dollar, briefly crossing the 20-to-the-dollar threshold to the weakest versus the greenback in 14 months. The dollar was off 0.6 percent against the Canadian dollar CAD=.