Markets plunged in the wake of President's Donald Trump announcement of a sweeping tariff regime Wednesday that shocked trade experts and investors alike.
Economists have warned that Trump's tariffs have heightened the likelihood of a recession, with one forecaster predicting it outright.
The selloff erased over $5 trillion in market value in the S&P 500 for the two trading days since Trump announced his tariffs.
The broader economy was already on shaky terrain due to fears over Trump's economic policy and the sweeping changes ushered in by the Republican administration's trade stances that could charge downward consumer sentiment.
Here's what we know about what happened in the markets and what could come next.
What did the markets do this week?
The markets nudged up ahead of Wednesday's tariff announcement but plunged in its wake.
The Dow Jones closed nearly 8% down, the S&P closed over 9% down and the NASDAQ closed 10% down.
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China hits back on tariffs, Europe set to announce their response
China fired the first response to the tariff regime, announcing it will impose reciprocal 34% tariffs on all imports from the U.S. Friday.
"This practice of the U.S. is not in line with international trade rules, undermines China’s legitimate rights and interests, and is a typical unilateral bullying practice," China’s finance ministry said in a statement.
The European Union will likely approve a first set of targeted countermeasures on up to $28 billion of U.S. imports in the coming days, Reuters reported Sunday.
The European Commission, which coordinates EU trade policy, will propose to members late on Monday a list of U.S. products to hit with extra duties in response to Trump's steel and aluminum tariffs rather than the broader reciprocal levies.
It is set to include U.S. meat, cereals, wine, wood and clothing as well as chewing gum, dental floss, vacuum cleaners and toilet paper.
Investors fear for worst, hope for reprieve
CNBC's Jim Cramer warned on "Mad Money" Friday that the "man-made obliteration" of the markets could lead to selloffs in the vein of either the COVID-crash, the dot-com bust of the early 2000's or − in the worst case − a 1987-style "Black Monday" event that saw the Dow Jones crash 22.6% in one day.
"If the president doesn't try to reach out and reward these countries and companies that play by the rules, then the 1987 scenario − the one where we went down three days and then down 22% on Monday − has the most cogency," Cramer said.