NEW YORK - Stock markets and the dollar tumbled Thursday after President Donald Trump's latest worldwide tariff salvo fanned a trade war that many fear will spark recession and ramp up inflation.
The dollar slumped by as much as 2.6% versus the euro, its biggest intraday plunge in a decade, and suffered sharp losses also against the yen and British pound.
On stock markets, Wall Street's tech-heavy Nasdaq Composite dove around 6%, while the retreat in the S&P 500 was its biggest in a day since 2020.
"The simultaneous decline in both stocks and the US dollar speaks volumes about investor confidence in Trump's trade policy," said City Index and FOREX.com analyst Fawad Razaqzada.
Shares in apparel companies, which rely on cheap labour in factories abroad, fell sharply with Nike sinking more than 11% and Gap tanking more than 20%.
Apple, whose iPhones are largely manufactured in China, fell over 9%.
Across the globe shares in major sectors including auto, luxury and banking, also took big hits.
Shares in Jeep-maker Stellantis fell 7.5% after it said it would pause production at some plants in Canada and Mexico as 25% car tariffs came into force.
Tokyo's Nikkei briefly collapsed more than 4%. In Europe, both the Paris and Frankfurt stock exchanges finished the day with losses of more than 3%.
Oil prices plummeted more than 6% on concerns an economic downturn would hit demand.
Gold, a safe haven asset in times of uncertainty, hit a new peak of $3,167.84 an ounce before retreating somewhat.
Yields on government bonds fell as investors fled risky assets and piled into safe-haven treasuries.
Renewed rate cuts?
The panic came after the US president unveiled a blitz of harsher-than-expected levies aimed at countries he said had been "ripping off" the United States for years.
The measures included a 34% tariff on world number two economy China, 20% on the European Union and 24% on Japan.
A number of others will face specifically tailored tariff levels, and for the rest, Trump said he would impose a "baseline" tariff of 10%, including on Britain.
"Markets, unsurprisingly have reacted badly," noted Richard Carter, head of fixed interest research at wealth manager Quilter.
"(US) Treasury yields have fallen sharply, as investors take flight and look for safe haven assets.
"This would suggest the Federal Reserve will need to put additional rate cuts on the table to look to prevent recession being triggered, but should it face inflation rising too, it is in somewhat of a bind," Carter added.
As world markets tumbled, Trump acknowledged the shock brought by his tariffs, likening it to a medical "operation," but said the US economy would emerge "far stronger."
White House Press Secretary Karoline Leavitt appeared to rule out the possibility of Trump pulling back any of the tariffs before they are implemented over the coming weekend.
"The president made it clear yesterday this is not a negotiation," she said on CNN.
However, Trump later said he would negotiate "as long as they are giving something that is good."
Investors are bracing for retaliatory measures, but governments also left the door open for talks.
China vowed "countermeasures" and urged Washington to cancel the tariffs, while calling for dialogue.
European Union chief Ursula von der Leyen said the bloc was "preparing for further countermeasures" but she emphasised it was "not too late to address concerns through negotiations".
Key figures around 2200 GMT
New York - Dow: DOWN 4.0% at 40,545.93 (close)
New York - S&P 500: DOWN 4.8% at 5,396.52 (close)
New York - Nasdaq Composite: DOWN 6.0% at 16,550.61 (close)
Paris - CAC 40: DOWN 3.3% at 7,598.98 (close)
Frankfurt - DAX: DOWN 3.0% at 21,717.39 (close)
London - FTSE 100: DOWN 1.6% at 8,474.74 (close)
Tokyo - Nikkei 225: DOWN 2.8% at 34,735.93 (close)
Hong Kong - Hang Seng Index: DOWN 1.5% at 22,849.81 (close)
Shanghai - Composite: DOWN 0.2% at 3,342.01 (close)
Euro/dollar: UP at $1.1050 from $1.0853 on Wednesday
Pound/dollar: UP at $1.3099 from $1.3007
Dollar/yen: DOWN at 145.99 yen from 149.28 yen
Euro/pound: UP at 84.34 pence from 83.44 pence
West Texas Intermediate: DOWN 6.6% at $66.95 per barrel
Brent North Sea Crude: DOWN 6.4% at $70.14 per barrel
