Trump in late May announced plans to impose steep tariffs on Chinese goods, and to follow up by June 30 with "specific investment restrictions and enhanced export controls" on Chinese companies and investors in "industrially significant technology".
Late Monday White House trade and manufacturing adviser Peter Navarro sought to downplay Mnuchin's remarks, telling CNBC television that the restrictions on investments in USA technology companies would just target China.
Even the so-called FAANG stocks - Facebook, Apple, Amazon.com, Netflix and Google - which have been largely immune to concerns about escalating trade threats exchanged between the United States and China - fell more than 2 per cent each (6.5 per cent, in the case of Netflix).
The CBOE Volatility index, known as Wall Street's fear gauge, spiked to its highest level in almost a month.
USA stocks are closing sharply lower as fresh trade worries hit stock markets around the world. "With respect to other countries, there's absolutely nothing on the table".
In response, the European Union has slapped additional tariffs on some 340 US products. U.S. President Donald Trump, who has promoted protectionist measures, is now mulling additional tariffs on European cars. Among big USA movers, Intel Corp. fell 3.4 per cent, Visa Inc. fell 3.2 per cent and Boeing Co. fell 2.2 per cent.
Xi was speaking Thursday to the Global CEO Council, a China-organised group of roughly 20 chief executives from mostly Western multinational companies such as Goldman Sachs and Volkswagen, the Journal said. As she pointed out, China is now "the largest or second-largest source of sales and profits for many USA multinationals".
"A trade war means lower global GDP".
"The market is perceiving that politics will become policy", said Brian Battle of Performance Trust Capital Partners in Chicago.
However, his confusing interview to CNBC did little to clarify the situation, as he said the administration was "not singling out China" but also that Treasury would release a report on Friday on the issue of investment restrictions on China.
The bill would allow the Committee on Foreign Investment in the United States (CFIUS) to review transfers of minority interests in companies dealing with critical infrastructure or critical technology as opposed to full acquisitions.
The administration could declare an economic emergency, or IEEPA, to justify the restrictions, according to the report.
Spokespersons for the Treasury, Commerce Department and the White House did not immediately respond to Reuters' requests for comment on the proposed restrictions.