Countries around the world threatened to ratchet up a trade war with the United States as President Donald Trump's sweeping tariffs ignited fears of steep price increases in the world's largest consumer market.

The penalties announced by Trump on Wednesday triggered a plunge in world financial markets on Thursday and drew condemnation from other leaders reckoning with the end of a decades-long era of trade liberalization.

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But there were conflicting messages from the White House about whether the tariffs were meant to be permanent or were a tactic to win concessions, with Trump saying they "give us great power to negotiate."

The U.S. tariffs would amount to the highest trade barriers in more than a century: a 10% baseline tariff on all imports and higher targeted duties on some of the country's biggest trading partners.

That could jack up the price for U.S. shoppers of everything from cannabis to running shoes to Apple's iPhone. A high-end iPhone could cost nearly $2,300 if Apple passes the costs on to consumers, based on projections from Rosenblatt Securities.

Businesses raced to adjust. Automaker Stellantis said it would temporarily lay off U.S. workers and close plants in Canada and Mexico, while General Motors (GM.N), opens new tab said it would increase U.S. production.

Canadian Prime Minister Mark Carney said the United States had abandoned its historic role as a champion of international economic cooperation.

"The global economy is fundamentally different today than it was yesterday," he said as he announced a limited set of countermeasures.

Elsewhere, China vowed retaliation for Trump's 54% tariffs on imports from the world's No. 2 economy, as did the European Union, which faces a 20% duty.

French President Emmanuel Macron called for European countries to suspend investment in the United States.

Other trading partners, including Japan, South Korea, Mexico and India, said they would hold off on any retaliation for now as they seek concessions.

Washington's allies and rivals alike warned of a devastating blow to global trade. Japan, one of the United States' biggest trading partners and its largest foreign investor, is now facing a "national crisis", Prime Minister Shigeru Ishiba told parliament.

The tariffs "clearly represent a significant risk to the global outlook at a time of sluggish growth," IMF Managing Director Kristalina Georgieva said in a statement.

"It is important to avoid steps that could further harm the world economy. We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty," Georgieva said.

U.S. Commerce Secretary Howard Lutnick and senior trade adviser Peter Navarro both told cable news programs on Thursday the president would not back off, and that the tariff increases were not a negotiation.

Trump then appeared to contradict them, telling reporters, "The tariffs give us great power to negotiate. Always have. I used it very well in the first administration, as you saw, but now we're taking it to a whole new level."

Stocks suffered a global meltdown, the U.S. dollar crumbled and oil prices were set for their worst week in months as analysts warned the tariffs could upend supply chains, hurt corporate profits and push the world economy towards recession.

The Dow (.DJI), opens new tab fell nearly 4%, its biggest one-day percentage loss since June 2020. The S&P 500 (.SPX), opens new tab lost nearly 5% and the tech-heavy Nasdaq (.IXIC), opens new tab declined nearly 6%, its worst day in percentage terms since the pandemic era of March 2020.

American companies with significant overseas production took a hit. Nike (NKE.N), opens new tab shares lost 14% and Apple (AAPL.O), opens new tab fell 9%.

Asian shares struggled to recover as their markets opened on Friday with Japan's Nikkei (.N225), opens new tab down 1.85%, extending its 2.8% slide from Thursday. Chinese markets were closed for a holiday.

Simple average and trade-weighted tariff rates by country

Trump says the "reciprocal" tariffs are a response to barriers put on U.S. goods, while administration officials said the tariffs would create manufacturing jobs at home and open up export markets abroad, although they cautioned it would take time to see results.

Vice President JD Vance in an interview with Newsmax faulted critics for taking a short-term view.

"That's fundamentally what this is about, the national security of manufacturing and making the things that we need, from steel to pharmaceuticals," Vance said.

Since returning to the White House in January, Trump's on-again, off-again tariff threats have rattled consumer and business confidence. Trump could step back again, as the reciprocal tariffs are not due to take effect until April 9.

"The tariff plan does not appear to be well thought-out. Trade negotiations are a highly technical discipline, and in our view these proposals do not offer a serious basis for negotiations with any country," said James Lucier, founding partner at Capital Alpha.

Economists say the tariffs could reignite inflation, raise the risk of a U.S. recession and boost costs for the average U.S. family by thousands of dollars.

Analysts said the tariffs could also alienate allies in Asia and undercut strategic efforts to contain China.

Trump has slapped a 24% tariff on Japan and a 25% tariff on South Korea, both home to major U.S. military bases. He also hit Taiwan with a 32% tariff as the island faces increased military pressure from China.

Canada and Mexico, the largest U.S. trading partners, were not hit with targeted tariffs on Wednesday, but they already face 25% tariffs on many goods and now face a separate set of tariffs on auto imports.