Stocks slid Thursday as President Trump’s escalating trade war with China and concerns about its economic implications continued to rattle Wall Street.

All three major stock indexes lost a significant portion of their gains from a Wednesday rally, which came in the wake of Trump’s decision to shift the focus of his sweeping tariff plans.

The Dow Jones Industrial Average closed with a loss of more than 1,000 points Thursday, falling 2.5 percent after rising nearly 3,000 points the previous day. The S&P 500 index sunk 3.5 percent lower, and the Nasdaq composite fell 4 percent after rising roughly 12 percent Wednesday.

Trump’s Wednesday decision to delay and reduce import taxes on goods from dozens of countries brought immediate relief to the stock market after days of steep declines. 

The announcement also brought some brief stability to the bond market, which Trump said had spooked him out of his previous tariff plans.

But both stocks and bonds reversed much of their progress Thursday as Trump pushed tariffs on Chinese goods even higher, raising the stakes of his battle with Beijing and the potential cost for Americans.

Trump said Thursday he would be boosting the “reciprocal” tariff rate on Chinese goods to 125 percent, bringing the overall tax rate on some Chinese products to an exorbitant 145 percent. 

"While Trump’s willingness to negotiate is a good sign for a potential future off-ramp, the reality is the recently announced shift does little to reduce the overall effective tariff rate,” said Larry Adam, chief investment officer at Raymond James, in a Wednesday analysis.

“We have often highlighted that the worst days in the market are often clustered near the best days, so investors should stay the course,” he continued.

Trump made a significant concession Wednesday by reducing his “reciprocal” tariffs on nearly all other nations to 10 percent and delaying their implementation for 90 days. After weeks of defending his tariff plans amid market blowback, Trump ceded he was worried about the financial implications of his agenda and acknowledged people were getting “queasy.”

White House officials and Republican lawmakers eagerly spun Trump’s drawback as part of a masterful negotiating strategy, even as he faced increasing public pressure from within the GOP to back down.

Trump’s decision to refocus his trade war on China also gave Republican lawmakers an easier political target to hit than the European and Asian allies who would face steep tariffs under his previous plan.

“They’ve ripped us off beyond anybody — how people stood for it sitting in my position is not even believable … but they did and all we’re doing is putting it back in shape. We’re resetting the table. And I’m sure that we’ll be able to get along very well,” Trump said of China on Thursday at the White House.

But while Trump may have made his tariffs more politically palatable, experts fear he may have significantly increased their economic burden.

The U.S. imported $439 billion in goods from China in 2024, according to Census Bureau data, making it one of the country’s largest trading partners. While Trump has long begrudged how much money Americans spend on Chinese products, China has also been a top buyer of U.S. pork, soybean and seafood exports, making Beijing a key player in the American agriculture industry.

Steep tariffs on Chinese goods are likely to spike the prices of consumer electronics, clothing and other key U.S. consumer goods, while Chinese tariffs on U.S. products could pose a serious hit to American farmers.

Some experts suggest Trump’s tariffs are high enough to completely halt U.S.-China trade.

“Duties on China are shooting up to levels so absurd that most US-China trade will come to a halt. A surge in core goods prices this summer looks inevitable,” wrote economists Samuel Tombs and Oliver Allen of Pantheon Macroeconomics in a Thursday research note.

The trade war with China is also spilling out into other areas of economic importance.

U.S. companies have been added to a Chinese blacklist, attempts to secure the sale of TikTok to a U.S-based firm are on ice and the Chinese government has allowed its currency to weaken.

“We would love to be able to work a deal,” Trump said Thursday, without offering to reporters what he plans as his next move to possibly negotiate with Beijing.

The renewed concerns over Trump’s trade policy gave new life to attacks from Democratic lawmakers, who accused the president of seeking credit for cleaning up his own mess.

Democrats have ripped Trump for weeks as the stock market faltered and fears among both businesses and consumers spiked, according to public polling.

“This was a week of self-made chaos and destruction. To paraphrase a former Trump official, Trump isn’t playing any 4D chess — it’s more like the staff is trying to keep him from eating the pieces,” Senate Minority Leader Chuck Schumer (D-N.Y.) said in a social media post Thursday.

Democratic lawmakers are also raising questions about who within Trump’s orbit may have illegally benefited from the massive rise in stock prices following the president’s surprise Wednesday announcement.

In a social media post shortly after the market opened Wednesday, the president urged Americans to “BE COOL” and buy stocks. The Trump campaign highlighted the president’s appeal after Trump sent stocks soaring with his announcement, mocking those who may not have heeded his call.

“This sequence of events raises grave legal and ethics concerns. The president, his family and his advisors are uniquely positioned to be privy to and take advantage of non-public information to inform their investment decisions,” wrote Democratic Sens. Adam Schiff (Calif.) and Ruben Gallego (Ariz.) in a letter to the Office of Government Ethics, requesting an investigation into potential insider trading within the White House.

House Minority Leader Hakeem Jeffries (D-N.Y.) said Thursday his caucus will investigate whether any Republicans made financial trades based on advanced knowledge of Trump’s decision to back down.

“We need to get to the bottom of the possible stock manipulation that is unfolding before the American people, including what, if any, advance knowledge did members of the House Republican Conference have of Trump’s decision to pause the reckless tariffs that he put into place?” Jeffries told reporters in the Capitol.