Stock markets worldwide sunk even lower on Friday after China announced that it would impose a 34% tariff on imported goods from the US, matching the rate set by US President Donald Trump earlier this week.

Not even a better-than-expected report on the US job market, which is usually the economic highlight of each month, was enough to stop the slide.

The S&P 500 was down 2.8% in early trading, coming off its worst day since COVID-19 wrecked the global economy in 2020. The Dow Jones Industrial Average was down 1,049 points, or 2.6, as of 9:35 am Eastern time (15.35 CET), and the Nasdaq composite was 3.2% lower.

So far there are few, if any winners, in financial markets from the trade war. European stocks saw some of the day’s biggest losses, with indexes sinking more than 3.5%. The price of crude oil tumbled to its lowest level since 2021. Other basic building blocks for growth, such as copper, also saw prices slide sharply on worries the trade war will weaken the entire global economy.

China’s response to US tariffs caused an immediate acceleration of losses in markets worldwide, with the nations being two of the world's largest economies.

Could Trump's trade war cause a global recession?

Markets recovered some of their losses following Friday morning’s US jobs report, which said employers accelerated their hiring by more last month than economists expected.

It’s the latest signal that the US job market has remained relatively solid through the start of 2025, and it’s been a linchpin keeping the economy out of a recession.

But that jobs data was backward looking, and the fear hitting financial markets is about what’s to come. Will the trade war cause a global recession? If it does, stock prices will likely need to come down even more than they have already. The S&P 500 is down nearly 15% from its record set in February.

Much will depend on how long Trump’s tariffs stick and what kind of retaliations other countries deliver. Some of Wall Street is still holding onto hope that Trump will lower the tariffs after negotiating with other countries to pry out some “wins”. Otherwise, many say a recession looks likely.

For his part, Trump has said Americans may feel "some pain" because of tariffs, but he has also said the long-term goals, including getting more manufacturing jobs back to the United States, are worth it. On Thursday, he likened the situation to a medical operation, where the US economy is the patient.

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“For investors looking at their portfolios, it could have felt like an operation performed without anaesthesia,” said Brian Jacobsen, chief economist at Annex Wealth Management.

But Jacobsen also said the next surprise for investors could be how quickly tariffs get negotiated down. “The speed of recovery will depend on how, and how quickly, officials negotiate,” he said.

Vietnam said its deputy prime minister would visit the US for talks on trade, for example, while the head of the European Commission has vowed to fight back. Others have said they were hoping to negotiate with the Trump administration for relief.

US firms with Chinese operations

On Wall Street, stocks of companies that do lots of business in China fell to some of the sharpest losses.

GE Healthcare got 12% of its revenue last year from the China region, and it fell 17.9% for the largest loss in the S&P 500. United Airlines, which is in an alliance with Air China and got a third of its passenger revenue last year from flights across the Pacific, lost 8.1%.

DuPont dropped 12.1% after China said its regulators are launching an anti-trust investigation into DuPont China group, a subsidiary of the chemical multinational. It’s one of several measures targeting American companies and in retaliation for the US tariffs.

In the bond market, Treasury yields continued falling sharply as worries rise about the strength of the US economy and as expectations rise for the Federal Reserve to cut interest rates to cushion it.

The yield on the 10-year Treasury tumbled below 4% to 3.92% from 4.06% late Thursday and from roughly 4.80% early this year. That’s a major move for the bond market.

In stock markets abroad, Germany’s DAX lost 3.9%, France’s CAC 40 dropped 3.6% and Japan’s Nikkei 225 fell 2.8%.