The global rout in stock markets continued on Friday as worries deepened about a trade war, after China retaliated against President Trump’s sweeping tariffs with steep levies of its own on U.S. goods.
The S&P 500 fell 2.5 percent on in early trading Friday. The benchmark U.S. index on Thursday posted its worst daily loss since 2020, plunging 4.8 percent.
Losses were widespread, hitting technology companies as well as firms that rely on Chinese manufacturing in their supply chains. Apple shares dropped about 4 percent. Shares in retailer Nike and Caterpillar, which makes construction equipment, fell about 5 percent. The tech-heavy Nasdaq Composite index fell nearly 3 percent.
European and Asian indexes also tumbled for a second day as investors weighed the economic effects of Mr. Trump’s tariffs, the dominant concern in markets. The Stoxx Europe 600 dropped more than 3 percent, erasing its gains for the year. In Japan, the Nikkei 225 fell 2.8 percent, matching its drop from the day before.
The Chinese government said on Friday that it would match Mr. Trump’s plan for 34 percent tariffs on goods from China with its own 34 percent tariff on imports from the United States. It also added 11 American companies to its list of “unreliable entities,” essentially barring them from doing business in China or with Chinese companies.
This is “another jolt of fear shooting through markets,” said Susannah Streeter, an analyst at Hargreaves Lansdown. “This was the fear that it wouldn’t just be one round of tariffs in the United States on partners but that there’s going to be this ratcheting up to lead into a fully-blown trade war.”
Markets got a little reprieve from the latest report on the labor market, which showed that U.S. employers added 228,000 jobs in March, which was far more than economists had expected. However, the unemployment rate rose to 4.2 percent.
Still, the jobs data “is backward looking and doesn’t say anything about how employers might fare over the coming months,” said Glen Smith, chief investment officer at GDS Wealth Management.
China’s moves showed that Beijing has no intention of backing down in the trade war with Mr. Trump. Investors were already on edge because of the potential disruption that Mr. Trump’s policies, including widespread deportations and layoffs of federal workers, could have on the economy.
Mr. Trump’s announcement on Wednesday, which he called “Liberation Day,” included a minimum tariff of 10 percent on nearly all imports, causing markets to convulse as investors dumped stocks and sought safety in government bonds.
On Friday, the yield on 10-year Treasury bonds fell steeply to 3.89 percent, the lowest since early October.
An index of the dollar against a basket of other major currencies slipped on Friday.
The severity of the stock market sell-off reflects how investors were taken by surprise by the scale of the tariffs. At the same time, Mr. Trump has said he is open to negotiating with countries, making it unclear how long tariffs will persist and making it harder to judge how companies might respond.
“Liberation day will not bring freedom from uncertainty,” analysts at Goldman Sachs said in a note.
Wednesday’s tariffs raised the average effective tariff rates on U.S. imports to levels not seen since the 1930s, analysts at S&P, the ratings agency, said. That would lower economic growth around the world and prompt central banks to set lower interest rates than they might otherwise have, the analysts wrote.
The prospect of weaker global economic growth has also weighed on commodities prices. Brent crude oil, the international benchmark, dropped more than 8 percent to around $64 a barrel, the lowest level in more than three years.
In Europe, bank stocks were hard hit, reflecting fears of tariffs hitting growth in a region already struggling because of weak exports and business investment. Bank of America said in a report on Friday that its latest economic forecast implied that the benchmark pan-European stock index could fall another 10 percent in the coming months. The “narrative has started to darken,” the bank’s analysts wrote.
There are still fears about further escalation. If the United States buys fewer Chinese goods then Chinese companies will look for other markets. That has raised concerns in Europe that even more cheap metals, chemicals and other products will head in its direction, worsening concerns about dumping.
“That’s a worry that other parts of the world may also impose tariffs because they don’t want their industries to be decimated further,” Ms. Streeter said.
Mr. Trump imposed steep levies on many Southeast Asian countries — including Vietnam, Indonesia, Cambodia — that are critical to the supply chains of some of America’s biggest brands. These countries also reprocess a lot of Chinese components for export to the United States, a popular way for companies to avoid longstanding U.S. tariffs on goods coming straight from China.
The stock market in Vietnam, which faces a 46 percent tariff, was down again on Friday after plunging the prior day. In South Korea, the Kospi Index fell 0.9 percent on Friday. Mr. Trump put a 26 percent tariff on imports from South Korea.
Stock markets in mainland China, Hong Kong and Taiwan were closed on Friday for a holiday.
Danielle Kaye contributed reporting from New York.
