Investing.com-- The Dow suffered its biggest slump in more than three years on Friday as China’s retaliatory tarifffs  against reciprocal levies recently unveiled by the Trump administration, raising the risk of a global economically-damaging trade war.

At 4:00 p.m. ET (21:00 GMT), the Dow Jones Industrial Average slumped 2,231 points, or 5.5%, the S&P 500 index fell 5.9%, and the NASDAQ Composite fell 5.8%.

China reciprocates, raising recession risks; Powell signals no hurry on rate cuts

China’s commerce ministry said Friday the country will impose a 34% levy on all U.S. products, matching the tariff on Chinese goods coming into the U.S. unveiled by President Donald Trump on Wednesday.

This news raised concerns that the tariffs announced by the Trump administration will be met by reciprocal actions by most of the country’s trading partners, resulting in a global trade war and a likely global recession.

JPMorgan raised the probability of a global recession this year to 60% earlier in the session, from a previous 40%, driven by the likely economic shock.

JPMorgan estimates this will lift the average effective tariff rate by 22 percentage points, translating to a $700 billion tax increase, or 2.4% of GDP.

“A hike of this size would be on par with the largest tax hike since WWII,” JPMorgan economists led by Bruce Kasman said.

The main Wall Street indices had suffered the biggest slide for five years on Thursday, the day after Trump announced tariffs on imported goods from his country’s main trading partners, raising fears of a global trade war which will ultimately lead to economic activity being severely crimped.

Strategists at UBS revised down their year-end 2025 targets for the S&P 500, primarily due to weaker growth expectations and recession concerns following the tariffs announcement.

UBS cut its S&P 500 target to 5,800 from 6,400, pointing to a deteriorating macroeconomic backdrop triggered by "one of the biggest changes in U.S. economic policy in a generation."

“Higher tariffs and lower growth will mean pressure on U.S. corporate earnings,” UBS’s Chief Investment Officer Mark Haefele said, warning that “risk premia are likely to stay elevated” amid policy uncertainty and softer economic data.

Treasury yields appear to reflect economic backdrop, with yields on the 10-year and 2-year Treasuries sharply lower.

Nonfarm payrolls rose in March

On the data front, the U.S. economy added more jobs than anticipated in March, but the previous month’s figure was revised sharply lower and the unemployment rate rose, adding to ongoing economic uncertainty.

Nonfarm payrolls for the month came in at 228,000, a jump from the revised lower 117,000 in February. Economists had anticipated 137,000 jobs in March, while the February figure has previously been 151,000.

Meanwhile, the unemployment rate was 4.2%, a rise from February’s 4.1% pace.

"The labor market is also trending sideways such that there is no impulse to adjust policy, at least for now," Jefferies said in a recent note.

Federal Reserve Chairman Jerome Powell said Friday the Fed doesn’t have to be hurry to adjusts interest rates at a time when the Trump administration’s trade policies are likely to boost inflation and slow grwoth.

“It feels like we don’t need to be in a hurry. It feels like we have time,” Powell said.

Apple continues to weaken as tech rout strikes again

Apple (NASDAQ: AAPL ) will remain in the spotlight after the iPhone maker’s stock took a sharp hit on Thursday, with shares dropping a more than 7% Friday.

As a company heavily reliant on Chinese manufacturing and global supply chains, Apple faces increased costs due to the 54% tariffs imposed on Chinese imports.

Additionally, companies with large exposure to China suffered badly, with Qualcomm (NASDAQ: QCOM ) and Caterpillar (NYSE: CAT ) down sharply, while Chinese companies listed in the U.S., like Alibaba (NYSE: BABA ), PDD Holdings (NASDAQ: PDD ), Baidu (NASDAQ: BIDU ) and JD.com (NASDAQ: JD ) all traded lower.

Elsewhere, GameStop (NYSE: GME ) rose 11% after CEO Ryan Cohen disclosed the purchase of 500,000 additional shares of the company, signaling a strong vote of confidence in the video game retailer’s future.

(Peter Nurse, Ayushman Ojha and Senad Karaahmetovic contributed to this article.)