The trade war has spurred the biggest market losses since the COVID-19 pandemic.
The Nasdaq Composite's slide on Friday confirmed a bear market for the tech-heavy index, compared to its record closing high of 20,173.89 on December 16. Meanwhile, the Dow Jones Industrial Average confirmed a correction to its record closing high of 45,014.04 on December 4.
China added 11 US bodies to the "unreliable entity" list, which allows Beijing to take punitive actions against foreign entities, including firms linked to arms sales to democratically governed Taiwan, which China claims as part of its territory.
Other impacted nations like Canada have also readied retaliation in a mounting trade war after Trump raised US tariff barriers to the highest levels in more than a century, leading to a plunge in world financial markets.
For the week, the S&P 500 fell 9.08 per cent, the Nasdaq declined 10.02 per cent, and the Dow fell 7.86 per cent. The Russell 2000 Small Cap Index dropped 9.70 per cent.
Investment bank J.P. Morgan estimated a 60 per cent chance of the global economy entering a recession by year-end, up from 40 per cent previously.
"This is significant and is unlikely to be over, hence the negative market reactions," said Stephane Ekolo, Market & Equity Strategist, Tradition, London. "Investors are afraid of a 'tit for tat' trade war situation."
Republican US Senator Ted Cruz, a staunch Trump supporter, warned the tariffs could pose "enormous risks" for the US economy and for Republicans' political fortunes.
"The effect of this is trillions of dollars of increased taxes on American consumers," he said on his podcast.
As the market selloff intensified, Trump was largely out of public view at his golf course, where he sent multiple defiant social media messages guaranteeing victory for the US economy.
Federal Reserve Chair Jerome Powell told a business journalists conference on Friday the tariffs were "larger than expected" and elevated the risk of both higher inflation and slower growth.
He did not directly address the US stocks selloff but acknowledged that uncertainty had paused business decisions.
"People are just, they just are kind of waiting for clarity," Powell said. "I can't tell you when that will pass, but you know, ultimately it will pass."
Just before Powell spoke, Trump said in a Truth Social post that it was the "perfect time" for the Fed to cut interest rates. "CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!" Trump wrote.
In an interview with conservative host Tucker Carlson on Friday, US Treasury Secretary Scott Bessent asserted the plunge in US stocks was driven more by the surprise emergence of China's DeepSeek AI tool than by Trump's policies.
The White House touted stronger-than-expected job data on Friday, after a Labor Department report showed the US economy added far more jobs in March than predicted.
But Trump's sweeping import tariffs could test the labour market's resilience in the months ahead amid sagging business confidence.
"To the many investors coming into the United States and investing massive amounts of money, my policies will never change. This is a great time to get rich, richer than ever before!!!" Trump said in a social media post in all caps.
After Beijing's retaliation, he posted: "China played it wrong, they panicked - the one thing they cannot afford to do!"
The 10 per cent baseline tariffs for US imports take effect on Saturday but shipments under way by then have until May 27 to arrive tariff-free, according to US Customs and Border Protection.
In Japan, one of the top US trading partners, Prime Minister Shigeru Ishiba said the tariffs had created a "national crisis" after a plunge in banking shares on Friday set Tokyo's stock market on course for its worst week in years.
With European shares also tumbling to the biggest weekly losses in years, the European Union's trade commissioner, Maros Sefcovic, said he held a "frank" two-hour call with US Secretary of Commerce Howard Lutnick and US Trade Representative Jamieson Greer.
"I was clear: US tariffs are damaging, unjustified," Sefcovic wrote on social media.
The EU is divided on how best to respond to Trump's tariffs.
with AP
