Asian shares sank again as the latest set of US tariffs, including a massive 104 percent levy on Chinese imports, was due to take effect.
Japan's Nikkei 225 index initially lost nearly 4 percent on Wednesday, and markets in South Korea, New Zealand and Australia also declined.
On Tuesday, the S&P 500 dropped 1.6 percent after wiping out an early gain of 4.1 percent. That took it nearly 19 percent below its record set in February. The Dow Jones Industrial Average dropped 0.8 percent, while the Nasdaq composite lost 2.1 percent.
The sharply higher tariffs were scheduled to kick in after midnight Eastern time in the US, and investors have no idea what to make of Trump's trade war.
The retreat overnight and into early Wednesday in Asia followed rallies for stocks globally earlier in the day, with indexes up 6 percent in Tokyo, 2.5 percent in Paris and 1.6 percent in Shanghai.
South Korea's Kospi lost 1 percent to 2,315.27, while the S&P/ASX 200 in Australia declined 2 percent to 7,359.30. Shares in New Zealand also fell.
China's blue chips slipped 1.2 percent, while Hong Kong's Hang Seng index tumbled 3.1 percent. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.7 percent.
Late on Tuesday, President Donald Trump said China was manipulating currency to protect against tariffs, but he thought China would make a deal at some point.
"US and China are stuck in an unprecedented, and expensive, game of chicken, and it seems that both sides are unwilling to back down," said Ting Lu, chief China economist at Nomura.
"Given the extraordinarily fluid situation, it is impossible to reasonably estimate the impact of the ongoing US-China trade war on China's economy."
Recession expected
Analysts have been warning to expect more swings up and down for financial markets given the uncertainty over how long Trump will keep the stiff tariffs on imports, which will raise prices for US shoppers and slow the economy.
If they last a long time, economists and investors expect them to cause a recession. If Trump lowers them through negotiations relatively quickly, the worst-case scenario might be avoided.
Hope still remains on Wall Street that negotiations may be possible, which helped drive the morning's rally. Trump said Tuesday that a conversation with South Korea’s acting president helped them reach the “confines and probability of a great DEAL for both countries.”
On Tuesday, Japanese stocks led global markets higher after the country’s prime minister, Shigeru Ishiba, appointed his trade negotiator for talks with the United States following a conversation with Trump.
China, however, said it will "fight to the end" and warned of countermeasures after Trump threatened on Monday to raise his tariffs even further on the world's second-largest economy.
White House press secretary Karoline Leavitt said Tuesday that Trump's threats of even higher tariffs on China would become a reality after midnight, when imports from China will be taxed at a stunning 104 percent rate.
That would coincide with Trump's latest set of broad tariffs, which are scheduled to kick in at 12:01 am. And Trump has made clear that he does not intend to have any exemptions or exclusions, according to the top US trade negotiator, Jamieson Greer.
