A worker holding US dollars banknotes poses for a photograph at a money exchange outlet in New Delhi on April 3, 2025. US President Donald Trump ignited a potentially ruinous global trade war on April 2 as he slapped 10 percent tariffs on imports from around the world and harsh extra levies on key trading partners. Arun SANKAR / AFP

The dollar slumped by as much as 2.6 percent versus the euro, its biggest intraday plunge in a decade, and suffered sharp losses also against the yen and British pound.

On stock markets, Wall Street's tech-heavy Nasdaq Composite dove around six percent, while the retreat in the S&P 500 was its biggest in a day since 2020.

"The simultaneous decline in both stocks and the US dollar speaks volumes about investor confidence in Trump's trade policy," said City Index and FOREX.com analyst Fawad Razaqzada.

Shares in apparel companies, which rely on cheap labor in factories abroad, fell sharply with Nike sinking more than 11 percent and Gap tanking more than 20 percent.

Apple, whose iPhones are largely manufactured in China, fell over nine percent.

Across the globe shares in major sectors including auto, luxury and banking, also took big hits.

Shares in Jeep-maker Stellantis fell 7.5 percent after it said it would pause production at some plants in Canada and Mexico as 25 percent car tariffs came into force.

Tokyo's Nikkei briefly collapsed more than four percent. In Europe, both the Paris and Frankfurt stock exchanges finished the day with losses of more than three percent.

Oil prices plummeted more than six percent on concerns an economic downturn would hit demand.

Gold, a safe haven asset in times of uncertainty, hit a new peak of $3,167.84 an ounce before retreating somewhat.

Yields on government bonds fell as investors fled risky assets and piled into safe-haven treasuries.

- Renewed rate cuts? -

The panic came after the US president unveiled a blitz of harsher-than-expected levies aimed at countries he said had been "ripping off" the United States for years.

The measures included a 34 percent tariff on world number two economy China, 20 percent on the European Union and 24 percent on Japan.

A number of others will face specifically tailored tariff levels, and for the rest, Trump said he would impose a "baseline" tariff of 10 percent, including on Britain.

"Markets, unsurprisingly have reacted badly," noted Richard Carter, head of fixed interest research at wealth manager Quilter.

"(US) Treasury yields have fallen sharply, as investors take flight and look for safe haven assets.

"This would suggest the Federal Reserve will need to put additional rate cuts on the table to look to prevent recession being triggered, but should it face inflation rising too, it is in somewhat of a bind," Carter added.

As world markets tumbled, Trump acknowledged the shock brought by his tariffs, likening it to a medical "operation," but said the US economy would emerge "far stronger."

White House Press Secretary Karoline Leavitt appeared to rule out the possibility of Trump pulling back any of the tariffs before they are implemented over the coming weekend.

"The president made it clear yesterday this is not a negotiation," she said on CNN.

However, Trump later said he would negotiate "as long as they are giving something that is good."

Investors are bracing for retaliatory measures, but governments also left the door open for talks.

China vowed "countermeasures" and urged Washington to cancel the tariffs, while calling for dialogue.

European Union chief Ursula von der Leyen said the bloc was "preparing for further countermeasures" but she emphasised it was "not too late to address concerns through negotiations".

- Key figures around 2200 GMT -

New York - Dow: DOWN 4.0 percent at 40,545.93 (close)

New York - S&P 500: DOWN 4.8 percent at 5,396.52 (close)

New York - Nasdaq Composite: DOWN 6.0 percent at 16,550.61 (close)

Paris - CAC 40: DOWN 3.3 percent at 7,598.98 (close)

Frankfurt - DAX: DOWN 3.0 percent at 21,717.39 (close)

London - FTSE 100: DOWN 1.6 percent at 8,474.74 (close)

Tokyo - Nikkei 225: DOWN 2.8 percent at 34,735.93 (close)

Hong Kong - Hang Seng Index: DOWN 1.5 percent at 22,849.81 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,342.01 (close)

Euro/dollar: UP at $1.1050 from $1.0853 on Wednesday

Pound/dollar: UP at $1.3099 from $1.3007

Dollar/yen: DOWN at 145.99 yen from 149.28 yen

Euro/pound: UP at 84.34 pence from 83.44 pence

West Texas Intermediate: DOWN 6.6 percent at $66.95 per barrel

Brent North Sea Crude: DOWN 6.4 percent at $70.14 per barrel