The Stoxx Europe 600 fell 1.3 percent on Thursday, with most sectors, including banks, technology and consumer goods, in the red.

Shares in consumer brands slumped as the Trump administration imposed steep tariffs on countries that are manufacturing hubs for shoes and clothing, for example a 46 percent tariff on Vietnam and 32 percent on Indonesia. Shares of Adidas and Puma each dropped about 9 percent. The stock of Pandora, a Danish jewelry company that makes its products in Thailand, tumbled 12 percent.

Shares in Maersk, the shipping giant, fell 7 percent on fears of a global trade slowdown. Big banks including HSBC, Commerzbank and Deutsche Bank dropped more than 4 percent.

Stock markets globally have been choppy in recent weeks, as investors have been whipsawed by the administration’s mixed messages on tariffs. Mr. Trump has previously announced, delayed, changed and ultimately imposed tariffs on Canada, Mexico, steel, aluminum, cars and auto parts.

Japan’s Nikkei 225 fell into a correction on Monday and was jolted again on Thursday, with analysts and trade experts in Tokyo caught off guard by Mr. Trump’s announcement of a 24 percent tariff on Japanese products. A number of business executives in Tokyo had earlier said they were optimistic that Japan’s low average tariff rate might help save it from high tariffs.

The uncertainty around the tariff levels has left investors unable to assess the potential ramifications for consumers, businesses and the broader economy.

The U.S. tariff rate on all imports is now around 22 percent, from 2.5 percent in 2024, said Olu Sonola, the head of U.S. Economic Research at Fitch Ratings. That rate was last seen around 1910, he said.

“This is a game changer, not only for the U.S. economy but for the global economy. Many countries will likely end up in a recession,” Mr. Sonola said. “You can throw most forecasts out the door.”

Through Wednesday, the S&P 500 had fallen 7.7 percent below its most recent peak in February. From that peak on Feb. 19 through the end of March, 10 of 11 sectors have fallen.

The Nasdaq Composite index, which is chock-full of the tech stocks that have come under pressure during the latest bout of selling, has tumbled even further, down almost 13 percent since its peak in December. Futures on the index tumbled about 3 percent Thursday morning.

The Russell 2000 index of smaller companies more exposed to the ebb and flow of the economy, and therefore arguably more of a bellwether for American businesses, is more than 16 percent below its peak in November.

In Asia, the stocks tumbled for a wide range of companies including technology and semiconductor giants, as well as major auto exporters. Shares of Japanese automaker Toyota fell more than 5 percent on Thursday, while South Korea’s Samsung Electronics fell close to 3 percent.

Signs of worry have also been evident in the rapid rise in the price of gold. Investors have flocked to the precious metal, sending it 19 percent higher in the first three months of the year, its biggest quarterly rise since 1986. On Thursday, gold was trading at over $3,100 per troy ounce.

Although many investors worry about the inflationary effect of tariffs, falling bond yields and a declining U.S. dollar suggest that most are more worried about waning economic growth.

The dollar slid as Mr. Trump spoke from the White House Rose Garden. On Thursday, an index that tracks the dollar against other major currencies fell 1.1 percent, the worst day in more than a month.

Some investors had hoped that the tariff announcement on Wednesday would cure some of the uncertainty in the financial markets. But few truly expected the news to be the end of Mr. Trump’s tariff talk and with it an end to the stock market volatility.

Uncertainty has “paralyzed” investors, consumers and business leaders, further pressuring the economy as activity slows, said George Goncalves, head of U.S. macro strategy at MUFG Securities.

Ahead of the announcement, prices in the equity options market, where investors can place bets that protect them against sharp moves in the stock market, suggested a consensus view that volatility would remain, said Mandy Xu, head of derivatives market intelligence at Cboe Global Markets.

“Investors no longer see tariffs as a one-time event risk, but an always-present risk,” she said, adding that the current expectation in the market is for volatility to persist, “given ongoing tariff and growth worries.”

‘This Could Get Much Uglier’: The Fatal Flaw In Trump’s Trade War

President Donald Trump’s sweeping tariff regime will completely transform America’s economic relationship with the rest of the world, all in the name of revitalizing domestic manufacturing.

And yet, many businesses won’t be rushing to shift their supply chains to U.S. shores.

For all the detail in Trump’s Wednesday announcement, his endgame is still shrouded in confusion. That’s lethal for long-term investment, making confident planning all but impossible.

“If you want stuff being put in the ground, you have to tell people the price, and the price needs to be fully inclusive of the tariff risk,” one former administration official in Trump’s first term, granted anonymity to speak freely, told me.

It’s not that tariffs can’t work as an action-forcing tool for companies to move production to the U.S. This is a wealthy country with one of the largest consumer markets in the world, and the president probably isn’t wrong that a lot of our trading partners would capitulate to keep serving it.

But I’ve asked multiple corporate executives in recent weeks whether companies are likely to start investing in manufacturing in the United States in response to Trump’s policies, and the message has basically been: that’s an unanswerable question right now. Because making those decisions requires understanding the relative costs of doing it vs. not doing it, and Trump is far too unpredictable to allow for that kind of calculation.

If the markets bloodbath gets much worse, will Trump back off? How much will tariffs change over the next three-plus years? And tariff policy could change drastically under a new president in 2028. Might companies just wait it out rather than making a long-term commitment of resources and hoping for the best?

Can anyone answer these questions with real authority?

To be fair, the administration did lay out which tariff rates will apply to each country, so businesses and investors have much more context than they did earlier in the week. But still, no one seems completely sure of what happens next. So it’s worth asking if Trump really delivered clarity this week.

“Maybe, not sure, we will see?” Barry Ritholtz, co-founder and chief investment officer of Ritholtz Wealth Management, said when I emailed him to ask if this was the type of certainty markets were looking for out of Trump’s so-called Liberation Day. “A lot depends on how allies and trading partners respond — if it’s a trade/tariff tit for tat, this could get much uglier.”

And it’s already pretty ugly from a market perspective. According to a calculation from Omair Sharif, who is president of the firm Inflation Insights, the weighted average tariff rate is set to rise to somewhere around 25 to 30 percent. Last year, it was closer to 2 percent.

It’s hard to overstate how aggressive a change that is — and it’s a lot higher than what markets were expecting. Trump, always one for building walls, has now built one out of tariffs.

Now a key question is: will the height of that wall change?

Asked whether foreign countries might negotiate down the rate they’ve been given — 10 percent tariffs for most countries and individualized higher rates for the “worst offenders” — a senior administration official suggested that those kinds of discussions weren’t imminent.

“Certainly, countries are very interested in trying to see what they can do to have more reciprocal trade,” the official told reporters in a briefing previewing Trump’s announcement. “For the moment, we are very, very focused on getting the tariff regime in place.”

Some more paranoid observers might read an implied threat into Trump’s repeated references to the fact that the announced tariffs weren’t as high as they could have been, saying he and his aides were “kind people.”

“This is not full reciprocal,” Trump said in the Rose Garden. “This is kind reciprocal.” (The executive order gives the president flexibility to respond if other countries retaliate.)

My point is, there are still far too many unknowns.

The administration argues that it is “setting the stage for long-term economic growth,” as Treasury Secretary Scott Bessent put it to Fox News on Wednesday. “We are putting ourselves back onto a sound trajectory.”

In the meantime, the domestic manufacturing sector is shrinking amid corporate paralysis.

“Manufacturers are putting these decisions on hold,” said Jay Timmons, head of the National Association of Manufacturers, in a CNBC interview ahead of the tariff announcement. “They’re waiting to see whether they should invest and hire. And that’s not good for the economy.”

China has vowed to hit back after President Donald Trump announced major new tariffs on its exports to the United States as part of his radical overhaul of a century of American global trade policy.

Trump unveiled 54% tariffs on all Chinese imports into the US Wednesday, in a move poised to push a major reset of relations and escalate a trade war between the world’s two largest economies.

“China firmly opposes this and will resolutely take countermeasures to safeguard its own rights and interests,” China’s Ministry of Commerce said in a statement Thursday morning.

The ministry slammed the move that stands as a centerpiece in Trump’s effort to reshape the rules of international trade as “typical unilateral bullying practice,” while urging the US to cancel the tariffs and “properly resolve differences with its trading partners through equal dialogue.”

“The United States has drawn the so-called ‘reciprocal tariffs’ based on subjective and unilateral assessments, which is inconsistent with international trade rules and seriously damages the legitimate rights and interests of relevant parties,” the statement said.

Trump’s announcement Wednesday adds 34% so-called “reciprocal” tariffs to existing 20% duties on all Chinese imports to the US. Since returning to power in January, Trump had already levied two tranches of 10% additional duties on all Chinese imports, which the White House said was necessary to stem the flow of illicit fentanyl from the country to the US.

Beijing responded to those levies swiftly, but moderately, imposing retaliatory tariffs on a range of US imports including agricultural products and fuel, while taking action against certain American firms and ramping up export controls.

“I have great respect for President Xi (Jinping) of China, great respect for China, but they were taking tremendous advantage of us,” Trump said during his roughly hour-long address in the White House’s Rose Garden on Wednesday. “They understand exactly what’s happening and … they’re going to fight.”

President Donald Trump holds a signed executive order imposing tariffs on imported goods, in the White House Rose Garden on Wednesday.

Carlos Barria/Reuters

Trump separately announced an additional 10% duties on all imports to the US and a host of country-specific measures that hit Asian countries particularly hard – rattlling markets and businesses across the world.

Ben Schwall, whose supply chain management firm STG Consultants advises companies on their China and Asia strategies, told CNN that industrial supply chains couldn’t keep up with “snap-of-the-finger” policy changes.

“I just wish we had longer vision to know what’s going to happen, what the real plan is,” he said.

‘All the cards have gone flying’

The 54% minimum tariffs that Trump imposed on China are higher than what many analysts had expected and could fundamentally reshape relations – and roughly half a trillion in trade – between the two economies after decades of interdependence.

The challenges are multifold for businesses with supply chains rooted in China, which are now left scrambling as they face not only the unexpectedly high US levies on Chinese imports, but also on other Asian countries.

To skirt existing tariffs, some Chinese and multinational companies have shifted production to other parts of Asia. But Trump’s new tariffs on other Asian nations announced Wednesday will hurt China, too: Vietnam faces levies of 46% and Cambodian goods will be tariffed at 49%.

Schwall said he had worked like a “madman” for the past six months to help clients devise plans to move supply chains out of China, on the assumption that this aligned with the White House’s goals.

But Trump’s immensely high new tariffs on South and Southeast Asian countries like Vietnam and Cambodia, where many companies have shifted at least some of their production from China, had changed the whole calculation, he said.

“Now it’s like someone just flipped over the table. All the cards have gone flying, and I don’t know what to do,” he said, lamenting quickfire US policy changes that make it difficult to plan ahead. “Everyone’s going to just stay in China or move back to China, so really the winner in all of this is China.”

Charts that show the “reciprocal tariffs” the US is charging other countries, in the James Brady Press Briefing Room of the White House on Wednesday.

Alex Wong/Getty Images

For Greg Mazza, the owner of a lighting company based in Danbury, Connecticut whose products are mainly sourced from China, those dynamics are posing difficult questions about how to guide his business forward.

So far, Mazza had only raised his prices by around 5%, instead of passing on the full cost of tariffs imposed by the Trump administration earlier this year to his customers.

But he thinks “the American consumer is not going to be able to absorb” the economic impact posed by the new broad-based tariffs, while suppliers and business owners that were planning to diversify supply chains elsewhere in Asia are going to struggle.

“People are going to rethink their approach and say, well, ‘I’m either going to deal with China or I’m going to try to start making things in America,’ which I don’t think is viable right now,” he said. “The economy as a whole may suffer enough to where that can’t even happen.”

Nick Marro, principal economist for Asia at the Economist Intelligence Unit, said the new levies may force companies with business in China to reevaluate the practice of keeping operations in the country, even as they enter other markets to diversify their supply chains.

“China is very embedded into global production networks ranging from finished goods to intermediate products to even the sourcing of raw materials, and so this is not going to be an easy or straightforward process,” he said.

The latest measures are “really going to refocus that question on US-China economic decoupling,” he said, adding that extensive US grievances around Beijing’s economic model and policies could also mean the US is not done imposing tariffs on China.

Tit for tat?

The US already had levies on hundreds of billions of dollars worth of Chinese imports into the country.

Many of those duties were holdovers from Trump’s first term in office, when he launched his first trade war with China that resulted in a “phase one” trading agreement that analysts say Beijing never fully implemented. The former Biden administration then ratcheted up tariffs on some additional Chinese goods, including a 100% rate on electric vehicles last year.

This time around, China will likely respond with precision, analysts say.

“Rather than broad retaliation, expect a playbook of calibrated pressure: new tariffs on politically sensitive US exports like agriculture and industrial machinery, expanded use of the ‘Unreliable Entity List’ to target high-profile US firms, and selective export controls on critical inputs,” said Craig Singleton, a senior fellow at the US-based Foundation for Defense of Democracies.

A container ship approaches a port in Qingdao, in eastern China’s Shandong province, on Wednesday.

AFP/Getty Images

“If (Chinese leader Xi Jinping) refuses to engage, the pressure escalates. If he engages too soon, he risks looking weak. Neither (leader) wants to be seen as folding first, but delay could deepen the standoff,” he added.

The tariffs also come at a challenging time for China’s slowing economy, with officials in recent weeks ramping up efforts to spur weak domestic consumption as they braced for a widening trade war.

“The focus right now really is going to be on whether Chinese officials can successfully rebalance the economy,” said EIU’s Marro. “That’s going to be tough, because with this export shock, we will likely see a depressive impact on production, on sentiments, all things which could discourage Chinese consumers in ways that undermine that rebalancing strategy.”

But as Trump’s sweeping move shakes up US economic relationships with both friend and foe, Beijing may see some silver lining, analysts say.

In recent weeks, Beijing has launched a charm offensive seeking to showcase itself as a champion of global trade and a reliable partner for companies and countries from East Asia to Europe.

With the US becoming an “unpredictable partner,” East Asian economies like Japan, South Korea and Taiwan are likely to reassess their relations with the US, which could potentially benefit China, according to Jason Hsu, a senior fellow at the Hudson Institute, a US think tank, and a former legislator in Taiwan.

“Japan and Korea, the bigger economies, they are still in no position to retaliate against US, but what they could do is to quietly develop a relationship with China to re-engage, to reassess Chinese market opportunities,” he said.

And as Chinese manufacturers may see shrinking paths for their products to enter the US, that will only place more emphasis on Beijing to continue to diversify its own markets.

Trump’s measures announced on Wednesday make for “a pretty severe decoupling between the two countries,” said Wang Dan, director of the Eurasia Group consultancy’s China team.

“But it doesn’t mean that China decouples from the rest of the world … it simply means China’s ultimate destination would have to shift from the US to elsewhere, like Europe, Latin America, Africa, you name it, greater Asia,” she said. “And that is not going to be a short-term phenomenon. It’s going to be a long-term phenomenon.”