Wall Street hopes the tariff threats between the United States and China are nothing more than tough talk followed by negotiations, closely followed trader Art Cashin told CNBC on Wednesday.
"The market tends to think this is all an opening ploy," said Cashin, UBS director of floor operations at the New York Stock Exchange. Some on Wall Street expect Trump will "come in and say something very dramatic and then say, 'OK, we'll meet you halfway and we'll see how things go.'"
The Dow Jones industrial average tanked at the open Wednesday after China announced additional tariffs on 106 U.S. products. The effective start date was not disclosed. The index was down about 350 points midmorning Wednesday.
The announcement came less than 24 hours after Trump unveiled a list of Chinese imports that his administration aims to target as part of a crackdown on what he deems unfair trade practices.
As long as the threats from China and the U.S. remain warning shots, it could be more digestible for the market, Cashin said. The tariffs "are weeks, if not months from implementation. So, we'll wait and see," he told "Squawk on the Street." "If you're an optimist, your hope is ... we'll hold the lows we saw before" in February.
Cashin has previously mentioned Wall Street has become somewhat accustomed to Trump's "dramatic" approach to dealmaking.
"You start off first with something very dramatic" as a starting point for negotiations, and then there's room to scale back, Cashin said last week.
China said Wednesday that the 25 percent levy on U.S. imports includes products such as soybeans, cars and whiskey. The tariffs will likely increase concerns of a tit-for-tat trade war between the U.S. and China provoked by Trump's announced levies on imports of steel and aluminum early last month.
In a tweet early Wednesday, Trump said the U.S. is "not in a trade war with China," adding "that war was lost many years ago by the foolish, or incompetent, people who represented the U.S."
During a CNBC interview Wednesday, Commerce Secretary Wilbur Ross said China's new tariffs do not represent a threat, adding it amounts to "three-tenths of a percent of our GDP."
— CNBC's Sam Meredith contributed to this report.