Wall Street has been struck with a COVID-like blow in the wake of Donald Trump's tariffs announcement, which sent markets tumbling and triggered new recession warnings for the world's largest economy.
US stock losses were calculated at more than $US3 trillion ($4.75 trillion) on Thursday, local time, with America's major indexes recording their largest falls since the COVID shock of March 2020.
But the US president insists America is "healing" after his decision to place new tariffs, ranging from 10 per cent to 49 per cent, on almost all imports.
"The operation is over!" Mr Trump wrote in an all-caps post on social media on Thursday.
"The patient lived, and is healing. The prognosis is that the patient will be far stronger, bigger, better, and more resilient than ever before."
Later, he added: "The markets are going to boom."
But at the close on Thursday, the S&P 500, which is considered Wall Street's main measure of health, was down 4.8 per cent — its worst day since the pandemic crashed the economy.
The Dow Jones Industrial Average, which tracks 30 major companies, fell 4 per cent. And the Nasdaq Composite, which includes all stocks on the Nasdaq exchange, was down 6 per cent.
"It really looks like the US is going to head for a recession," Gary Hufbauer, a senior fellow from Washington's Peterson Institute for International Economics, told the ABC.
"And then, if there is a recession, given the very lofty values of American shares at the end of 2024, it would seem that there's probably more room [for the markets] to go down.
"To me, that would be a somewhat better bet than thinking they were going to have a quick rebound."
The response to the tariffs is a stark shift from just a few months ago, when the promise of business-friendly policies under the Trump administration propelled US stocks to record highs.
Everything from crude oil, to big tech stocks, to the value of the US dollar fell.
Smaller companies were among the worst hit. The Russell 2000 index of smaller stocks dropped 6.6 per cent, putting it more than 20 per cent below its record.
Concern and uncertainty around Mr Trump's looming tariffs had already pulled the S&P 500, which tracks the US's top 500 publicly traded companies, 10 per cent below its all time high.
But Mr Trump still managed to surprise investors with "the worst case scenario for tariffs", according to Mary Ann Bartels, chief investment officer at US wealth management firm Sanctuary Wealth.
"This was the first bullet thrown in this trade war and it could get nasty," said Elias Haddad, a senior markets strategist at investment bank Brown Brothers Harriman.
"That is spooking investors.
"We could see the correction bottom out when we have firm evidence that we're not falling into recession."
World leaders are now working out how to deal with America's turn back to protectionism. Europe is vowing to take unified retaliatory measures.
Australia, which avoided tariffs beyond the 10 per cent minimum, says it won't implement retaliatory counter-tariffs. Instead, Prime Minister Anthony Albanese outlined a five-point response plan, and Opposition Leader Peter Dutton said he largely supported it.
— with in Washington DC
ABC/wires
