US officials are urgently trying to find out how a dairy cow in the north-western state of Washington may have contracted "mad cow" disease.
Japan reacted quickly to the news of the possible case
The US dollar and Japan's stock markets dropped as countries around the world banned US beef imports in response.
The cow - whose meat was not intended for people to eat - is the first suspected case of mad cow in the US.
A top agricultural official said the US had gone beyond calling the incident a "suspected case" of the disease.
"We are calling this a presumptive positive," Ron DeHaven told the French news agency AFP.
Japan, Mexico and South Korea - the three top importers of US beef - are leading a list of more than a dozen countries to slap bans on US meat.
Early on Thursday, China became the latest country to suspend beef products from the US.
US dollar falls
Cattle futures drop as far as market allows
Share prices in restaurants plunge in US and Japan
Cattle futures fell as far as markets allow, Reuters reported, as experts at Purdue University estimated the scare could cost the American beef industry $2bn.
Shares in burger giant McDonald's fell by about 5% on the New York Stock Exchange, although the company said its supply chain was not linked to the suspected mad cow disease case.
Burger King and Wendy's stock were also affected, as were shares in Japan's Yoshinoya, a restaurant chain specialising in beef.
Search for source
US officials say they hope to discover in a day or so where the four-year-old cow was born and how it became infected.
The suspicion is that the cow may have contracted mad cow, or BSE (Bovine Spongiform Encephalopathy), after eating contaminated animal feed.
COUNTRIES THAT HAVE BANNED US BEEF
Canada - partial ban
United Arab Emirates
*Top three importers
The US Government and the food industry are trying to reassure consumers that there is no risk to humans.
But the fear is that any further cases could prompt customers to panic, the BBC's Rob Watson in Washington says.
US authorities are anxious to find out what is known as the cow's birth herd to see if any other animals in the herd were infected and what they had been eating, our correspondent says.
The farm near Yakima, Washington, where the cow was found, has been quarantined.
Mr DeHaven said that because BSE was usually transmitted through contaminated feed and had an incubation period of up to five years, it was "important to focus on the feed where she was born".
Tissue samples from the suspected cow are already being studied in the UK, which suffered a devastating outbreak of BSE in the mid-1990s.
The results will be known in a few days' time.
Details of the case were revealed by US Agriculture Secretary Ann Veneman, who said a Holstein cow had tested positive on 9 December - but she insisted the country's beef was safe.
The dairy cow had been sick or injured and was never destined for the public food supply, Ms Veneman said.
BOVINE SPONGIFORM ENCEPHALOPATHY
First surfaced mid-1980s
Can pass to humans through infected beef products
Human form of disease called vCJD
vCJD has killed 137 people, mainly in the UK
The European Union said it was keeping a close eye on the situation, but it has anyway banned most US beef for many years because of growth hormones in the meat.
BBC business correspondent Mark Gregory says the loss of Asian markets in particular is a huge blow to the US beef industry, which is worth $38bn a year.
He says that a collapse of US domestic demand for beef would be the industry's ultimate nightmare, since 90% of US beef is consumed at home.
BSE has been linked to new variant Creutzfeldt-Jakob Disease (vCJD), a human brain-wasting disease.
First diagnosed in Britain in 1986, BSE affected 178,000 British cattle and resulted in the eventual destruction of 3.7 million animals.
It cost British farming billions of dollars as countries around the world banned British beef.
Correspondents say the US beef business has been booming - partly due to the popularity of the protein-rich Atkins diet.