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On Wednesday, President Trump once again surprised the markets by announcing steep reciprocal tariffs on multiple trading partners, along with a 10% baseline tariff on all imports. The move triggered a sharp market sell-off.

Deutsche Bank senior US economist Brett Ryan told Yahoo Finance that the tariffs were more severe than expected. For instance, Chinese imports will face a 34% tariff, while goods from the European Union will be hit with a 20% tariff. Trump claimed these figures were actually conservative, as they were only half of what the administration could have imposed based on White House estimates of foreign tariffs on US goods.

Following the announcement, US stock futures tumbled. Nasdaq 100 futures dropped over 4.5% by 6:15 p.m. ET, while S&P 500 futures fell 3.5%, and Dow-linked contracts declined by around 2.2%. Major tech stocks saw heavy selling pressure in extended trading, with Apple plunging over 6% and Nvidia (NVDA), Meta (META), Amazon (AMZN), and Tesla (TSLA) each losing more than 4%.

Ryan noted that his team had anticipated an effective tariff rate between 15%-20%, but Wednesday’s announcement suggests the actual rate will be closer to 25%-30%. Evercore ISI strategists estimated the effective tariff rate at 29%, marking the highest level in over a century.

While not outright recessionary, Ryan warned that these tariffs significantly raise the risk of an economic downturn. Renaissance Macro’s head of economics, Neil Dutta, called the move "a massive shock to the economy," adding that it was surprising stocks hadn’t fallen even further. He cautioned that investors hoping for a reversal shouldn’t be too optimistic.

With the potential for retaliatory actions from affected countries, market analysts doubt this will be a one-time event where risks are immediately priced in. Instead, they anticipate ongoing uncertainty.

Citi’s head of US equity trading strategy, Stuart Kaiser, stated in a client note that the tariff measures were worse than investors had anticipated, advising against buying the dip just yet. He predicted continued volatility, with a cycle of negative headlines, extended deadlines, and the possibility of tariff rollbacks based on negotiations. "In our view, tariffs will remain a persistent headwind," Kaiser concluded.

Paraphrasing text from " Yahoo!Finance""all rights reserved by the original author