Donald Trump’s long-awaited tariffs sparked economic turmoil at home and abroad today, as market panic set in following the major change of US tax policy. The president’s announcement that all countries would now be subject to between 10% and 50% when selling goods to the world’s biggest economy saw an immediate backlash, with the US dollar slumping nearly 2%.

Wall Street saw a major slump as bells rang to open the day’s trading at 2.30pm, with the S&P 500 down 3.2% and the tech-dominated Nasdaq dow by 4.5%. The Dow Jones industrial average, which tracks 30 of the largest US companies, dropped by 2.6% to 41,087 points. Household name US firms bore the brunt of panic, with Nike shares sliding 10%, and Amazon and Golman Sacks both falling by 6% a piece.

Global stock markets dropped dramatically this morning, with the UK FTSE 100 down by 1.6%, Germany’s Dax by 2.2% and France’s CAC by 2.5%.

The British pound, by contrast, surged by 3 pence to the dollar, while Deutsche Bank warned its clients to “beware a dollar confidence crisis”.

Oil prices fell by 5.8% a barrel, over fears a global recession will reduce energy demands, while the price of gold - often bought when investors fear stock market instability - surged to a record high of $3,167.50.

Governments around the globe issued reactions to President Trump’s press conference, with EU Commission president Ursula von der Leyen branding the move “a major blow to the world economy”.

She warned the US president that the EU will take a unified approach, laying the groundwork for a trade war if President Trump refuses to back down.

She said: “We are prepared to respond.”

"We are already finalising the first package of countermeasures in response to tariffs on steel and we're now preparing for further countermeasures to protect our interests and our businesses if negotiations fail.

"We [Europe] are in this together: if you take on one of us, you take on all of us. Our unity is our strength."

China, whose new 50% tariffs are now among the highest in the world when selling to the United States, demanded that Washington “immediately cancel” the planned levy.

Beijing’s commerce ministry warned that the tariffs “endanger global economic development” as well as hitting the US economy and citizens.

The ministry added: “China urges the US to immediately cancel unilateral tariff measures and properly resolve differences with trade partners through equal dialogue.

“There is no winner in a trade war, and there is no way out for protectionism.”

South Korea’s acting president Han Duck-soo vowed an “all-out” response after the Asian nation was winded by 25% tariffs.

The president added: “As the situation is very grave with the approach of the reality of a global tariff war, the government must pour out all of its capabilities at its disposal to overcome this trade crisis.”

Meanwhile Japan’s Prime Minister Shigeru Ishiba said: “Japan is a country that is making the largest amount of investment to the United States, so we wonder if it makes sense for [Washington] to apply uniform tariffs to all countries.”

Mr Ishiba’s comments came after the Nikkei stock exchange briefly dropped by 4%, the country’s lowest level for eight months.

Australia’s Prime Minister Anthony Albanese branded the “unilateral action” as “totally unwarranted”. He told a press conference that the move “goes against the basis of our two nations’ partnership.”

“This is not the act of a friend. Today’s decision will add to uncertainty in the global economy and it will push up costs for American households.”

He said Australia would not impose tariffs nor “join a race to the bottom” in response, in order to avoid hiking costs for his people.

Adam Hetts, a portfolio manager at Janus Henderson Investors, said markets were unlikely to calm down over the coming days.

“Eye-watering tariffs on a country-by-country basis scream ‘negotiation tactic’, which will keep markets on edge for the foreseeable future.

“Fortunately, this means there’s substantial room for lower tariffs from here, albeit with a 10% baseline in place.

“We’ve seen the administration have a surprisingly high tolerance for market pain, now the big question is how much tolerance it has for true economic pain as negotiations unfold.”

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Trump’s bold attempt to reshape international trade has sent shockwaves through global markets.

“The effects of ‘Liberation Day’ are being felt far and wide, with Asian markets down overnight, European stocks under pressure in early trading, and US futures pointing to a big drop later today.

“With tariffs reaching levels unseen in over a century, the US is poised to rake in an additional 600 billion US dollars in tariff revenue in an optimistic scenario, or put that another way, that’d be a 600 billion dollar added cost for businesses or consumers to stomach.”