Stock market turmoil deepened on Friday as China’s tariffs announced by Donald Trump increased the likelihood of a trade war and global economic losses.

All three major U.S. stock indexes fell more than 5%, and the S&P 500 fell nearly 6%, ending its worst week since the U.S. stock market.

In the UK, the FTSE 100 fell nearly 5% – the steepest decline in five years, while the Asian market has also declined, with exchanges in Germany and France facing a similar decline.

Trump vowed to reshape the global trade order, refuting concerns about market shocks and noting that the U.S. labor market is strong.

“Strong,” he urged his followers on social media. “We can’t lose.”

Since Trump announced a new 10% import tax on goods in each country, global stock markets have lost trillions of dollars in value, including products from dozens of countries including China, the European Union and Vietnam, facing higher interest rates.

Analysts say the moves will take effect on Saturday, some of which are the largest tax increase in the U.S. since 1968.

They expect these measures to lead to a trade contraction and warn them that it can drive many countries into recession.

China responded to Trump on Friday, hitting U.S. goods with a 34% import tax, curbing exports of key minerals and adding U.S. companies to its blacklist, calling Trump’s actions “bullying” and violating international trade rules.

Other countries seem to want them to be able to negotiate a deal, despite conflicting signals from the White House regarding their interest in the talks.

EU Trade Commissioner Maroššefčovič said retaliation was planned, saying on Friday he had two hours of “candal” communication with U.S. officials and wrote on social media that trade relations needed “new approaches”.

“The EU is committed to meaningful negotiations but is also ready to defend our interests,” he said. “We stay in touch.”

Trump’s move is consistent with his promises on the campaign last year.

But they are far-reaching than many analysts expected, which triggered some of the worst days in the stock market in 2020, when Covid-19-19 led to global closures and other disruptions.

The sell-off began with companies such as Apple and Nike, which rely heavily on suppliers in Asia. But on Friday, it entered sectors that usually don’t face the direct impact of tariffs, such as consumer staple foods, health care and utilities.

“The frank sentiment is so sour, it should be so sour,” said Mike Dickson, head of research and quantitative strategy at Horizon Investments in the United States.

“What we really worry about now is what we see at 6 a.m. (when China retaliates), how many of them are there?”

JP Morgan said in a note to investors that the chances of a global recession are now reduced by 60% this year, higher than the previous 40%, noting that the shock of tariffs could have lowered U.S. growth this year by 2 percentage points.

Some investors downplayed the losses and pointed out that their share prices were of surprising value over the past few years.

“The market shifts we’re seeing in the market – they’re violent because the situation is much faster than the rise,” said Tim Pagliara, CEO of Capwealth, Tennessee.

He said the White House is trying to “reset” in global trade, but efforts are needed.

“We’ve talked about trade imbalances throughout our careers. Nothing has ever happened. So something has to happen,” he said. “We’re going to articulate the sports environment on some of the relationships that just lost the balance.”

Jerome Powell, head of the U.S. central bank, said in a speech Friday that he believes the economy remains “stable”, suggesting the latest data showed strong hiring in the U.S. in March.

But he acknowledged the high uncertainty.

“What we learned is that tariffs are higher than expected, and are higher than all forecasters,” Mr Powell said, warning that growth will slow and prices may rise.

In the U.S., housing-related companies are a highlight in the market, perhaps in the hope that turbulence could lead to lower mortgage rates and help the U.S. housing market.

Nike and other apparel retailers hammered on Thursday also fell some ground on Friday, hopeful after Trump said a “very productive call” with Vietnam’s leaders.

Cambodia also sent a letter to reduce tariffs and require the United States to negotiate.

But the rest of the market remains bleak.

Apple’s stock relies heavily on China for manufacturing, down more than 7% on Friday. The market value of iPhone manufacturers has dropped by about 15% since Wednesday.

• Dow Jones fell 5.5%, bringing it down 10% from its February peak – a milestone known as a correction.
• Nasdaq shares fell 5.8%, removing about one-fifth of its value since December.
• In the UK, the FTSE 100 index fell 4.9%, the biggest one-day decline since March 27, 2020.
• In Europe, France’s CAC 40 fell by 4.3%, while in Germany, the DAX fell by nearly 5%.
• Earlier in Japan, the Prime Minister called the situation a “national crisis” and Nikkei 225 fell by more than 2.7%.
• Brent crude, which is the international oil price benchmark, also fell nearly 6%.

As the rout continued, even some White House allies began to criticize these measures.

Republican Senator Ted Cruz said in a podcast dedicated to tariffs that Trump’s move could benefit the United States, while warning of “huge risks.”

“If we start 30 days from now, 60 days from now, 90 days from now, our U.S. tariffs and a lot of tariffs on American goods in every other country on the planet, it’s a terrible result, it’s a terrible result, it’s a terrible result, it’s a terrible result,” he said.

The tariff announcement was shocked by confidence in the United States and abroad.

In Kansas, Louise and Vance Ehmke woke up at 3 a.m. this week as their wheat and rye seed farms worry.

They said they expect Trump’s tariffs on steel and aluminum last month raised the price of plow dishes they bought from Canada.

Their industry sells many crops abroad and is also retaliating for other countries.

“This is not good news for our farmers, because hell is not good news for anyone who buys anything imported,” Vance said.

In the Falkland Islands, an island in the South Atlantic, Janet Robertson, general manager of the Merger Fishing Co., Ltd., wanted to know how its 42% tax on exports to the United States would reach its sales of toothfish.

“At present, we have not made any dramatic decisions yet,” she said.

But, she added, fishing is “by far the most important industry in the Falkland Islands.”

“Selling toothfish to the United States is a big part of that,” she said.

“We want to know where everything will go.”

Reported by Tom Espiner, Cai Pigliucci and BBC World Service.