WASHINGTON — A second day of market devastation shook Washington on Friday, vanishing more than $5 trillion in value in one of the largest 48-hour losses on record — an extraordinary rout caused not by pandemic, war, terrorism or bank failure, but by policy set by the American president.

The policy, announced by President Trump on Wednesday, would levy steep tariffs on nearly every nation in the world in the coming days, starting with a base tariff rate of 10% but climbing higher for some of the largest U.S. trading partners, including China, South Korea, Japan and the European Union.

The market drop has prompted a small but influential group of Republican senators to partner with Democrats in a nascent effort to wrest back control over tariff policy from Trump.

The Standard and Poor’s 500, NASDAQ and the Dow Composite all reeled over the news from the morning bell to close. The Dow dropped 2,231.07 points, or 5.5%, in its largest drop since the pandemic started, following a 1,679-point drop the day prior. The S&P 500 fell 5.97% to 5,074.08, and the NASDAQ dropped 5.8%, to 15,587.79, entering bear market territory.

Before the markets opened Friday, China announced it would reciprocate with a 34% tariff on imported U.S. goods. And as markets spiraled, the Federal Reserve chair, Jerome Powell, warned of “persistent” negative effects from the new trade policy.

“We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation,” Powell said Friday. “Tariffs are highly likely to generate at least a temporary rise in inflation.”

Reacting to the markets, Treasury Secretary Scott Bessent told Tucker Carlson in an interview on Friday that “Wall Street’s done great. It can continue doing well.” But, he added, “it’s Main Street’s turn.”

“This is transformational for the American economy, for the American worker and for the new Republican alignment,” Bessent said. “I think this is the beginning of a process. We are going to reindustrialize. We have gone to a highly financialized economy — we have stopped making things, especially a lot of things that are relevant for national security.”

J.P. Morgan increased its assessment of the risk of recession this year to 60%, up from a 40% chance it had published just days prior. And the World Trade Organization warned of deep trouble to come if Trump refuses to change course.

“While the situation is rapidly evolving, our initial estimates suggest that these measures, coupled with those introduced since the beginning of the year, could lead to an overall contraction of around 1% in global merchandise trade volumes this year, representing a downward revision of nearly four percentage points from previous projections,” said Ngozi Okonjo-Iweala, director-general of the WTO. “I’m deeply concerned about this decline.”

Asked about the chances of a U.S. and global recession hitting this year, Senate Minority Leader Chuck Schumer, a Democrat from New York, said, “I’m very worried about it.”

“This is one of the most disastrous and poorly thought out policies that the Trump administration has done thus far, and that’s saying a lot,” he added.

Responding to the crisis, Sen. Charles E. Grassley (R-Iowa) partnered with Democratic Sen. Maria Cantwell from Washington state to introduce a bill that would require the president to submit new tariff policies to Congress for notification, review and approval.

“I’ve long expressed my view that Congress has delegated too much authority on trade to the executive branch under Republican & Democrat presidents,” Grassley wrote on X.

The bipartisan bill already has three additional Republican sponsors — Sens. Jerry Moran of Kansas, Lisa Murkowski of Alaska and Mitch McConnell of Kentucky. Other Republicans, including Trump supporter Sen. Thom Tillis of North Carolina, are expressing interest in the bill.

The Grassley-Cantwell bill marks the second time senators pushed back on Trump’s new import taxes in just a week. On Wednesday, in a rare rebuke of the president, the Senate passed a resolution Wednesday designed to thwart the imposition of tariffs on Canada.

Four Republicans — including Murkowski and McConnell — joined all Democrats in passing the resolution on a 51-48 vote.

Democratic leadership in the House of Representatives hopes the Grassley-Cantwell bill might have a path to passage in their chamber eventually, but one senior congressional aide said that leadership is doubtful anything will move in the short term.

“I don’t see it yet,” the aide said, granted anonymity to discuss internal deliberations, “but down the road, it’s possible.”

The White House said that its base tariff rate of 10% would go into effect at midnight Saturday, and that its country-specific duties would go into force Wednesday.

Trump, meanwhile, told investors on social media Friday, “MY POLICIES WILL NEVER CHANGE.”

But in a separate post, the president said he had discussed a deal with leadership in Vietnam — one of the nations hardest hit, with a 46% tariff rate — in a sign he is willing to negotiate over the policy.

Trump stated that Vietnam would be willing to cut its tariffs “down to ZERO” to strike an agreement with the United States. But Vietnam’s tariffs on the few U.S. goods it purchases are already low. Instead, the high rate imposed by the Trump administration on Vietnam actually targets the U.S. trade deficit with Vietnam — a capitalist result of U.S. consumers wanting to purchase more Vietnamese goods than the other way around.

As with other countries, such as Israel and Switzerland, which have no import duties on U.S. goods, it is unclear what will be required from each country for Trump to lower or eliminate rates. A consistent measure for success has not been articulated by the administration. To the contrary, senior aides to Trump have repeatedly referred to the 10% baseline tariff rate as a new normal.

Cambodia, hit with a 49% import tax, also asked Trump on Friday to postpone implementation of the new rate.

The president is in Florida golfing at his resort for the weekend.

The E.U. has the second-largest consumer market in the world behind America; China is third. But China and the E.U. have not exactly been cozy in recent years. Europe has regularly blasted China for overproducing and dumping artificially cheap products on the global market, and European leaders have criticized China’s stance toward Russia’s war in Ukraine, among other political and social issues.

Still, the E.U. is staring down 20 percent across-the-board tariffs in the United States, and even higher levies on major products like cars and trucks. China is confronting rates in excess of 50 percent. There’s a small chance that those tariffs could drive the two large economies closer together, experts said — an unintended consequence at a time when Mr. Trump’s America has been trying to weaken China.

There have been early hints of a thaw. The E.U. imposed higher tariffs on Chinese-made electrical vehicles last year, but China’s commerce ministry said at a news conference on Thursday that the two sides had agreed to restart negotiations. Olof Gill, an E.U. spokesman for trade, said officials had agreed to “continue discussions” on electric vehicle supply chains and take a “fresh look” at pricing.

But there is an even greater possibility that this moment will tear the E.U. and China further apart. China’s reduced access to American consumers could prod its companies to send even more cheap metals, chemicals and other products in Europe’s direction, worsening concerns about dumping and heightening already-high tensions on other matters. Relations between the two nations could deteriorate, widening the damage as America blows up longstanding global trade patterns.

“There’s two ways that this could play,” said Theresa Fallon, an analyst at the Center for Russia, Europe, Asia Studies in Brussels. “Europe is in a really tough position.”

Europe is responding quickly to Mr. Trump’s trade war. It plans to finalize next week initial lists of goods destined for retaliatory tariffs, and officials have promised more will come. It is also trying to negotiate to get rid of the tariffs, with the E.U. trade commissioner set to meet his U.S. counterparts through teleconference on Friday.

If the U.S. tariffs are not quickly negotiated away, Europe — and China — could find themselves looking for new consumers.

Another big part of Europe’s strategy? Making new friends.

Since late last year, the bloc has worked to expand relations with India, South American countries, South Africa, South Korea and Mexico. It has also drawn nearer to Canada and the United Kingdom, especially on defense issues.

Yet the U.S. is difficult to replace with one-off trade deals elsewhere because of the sheer size of its consumer market: $18.8 trillion in 2024, according to World Bank data. The E.U. trails at about $10 trillion, China at about $7 trillion. America is the E.U.’s most important export market.

Filling a U.S.-shaped void with China, while mathematically obvious, would be tricky. China and the E.U. have been moving further apart in recent years, with declining trade flows, and regular accusations by the E.U. that China is using trade practices that distort the market.

Europe’s dilemma when it comes to China has been on full display in the way that European leaders have talked about the Asian nation in recent months.

“We must engage constructively with China,” Ursula von der Leyen, who heads the E.U.’s executive arm, said during a speech in Davos, Switzerland, in January. She talked about expanding trade and investment ties “where possible.”

But when Mr. Trump’s tariff announcements came out this week, a flood of cheap goods coming from Asia was an immediate concern.

“We will also be watching closely what indirect effects these tariffs could have, because we cannot absorb global overcapacity, nor will we accept dumping on our market,” Ms. von der Leyen warned in her televised response on Thursday to the Trump tariffs.

The E.U. and China are to have a summit this year, though details on timing and location have yet to be determined.

Noah Barkin, a Berlin-based visiting senior fellow at the German Marshall Fund and a specialist on China, said: “Trump’s tariffs are likely to divert a massive amount of Chinese exports into the E.U.”

“The bloc is likely to throw its entire trade policy toolbox at Beijing in response,” he added. “It is difficult to envision a scenario where this ends well for the E.U.-China relationship.”

As with many of his political positions, President Trump’s extraordinary new tariffs are based on the presumption that the United States is being treated unfairly by the rest of the world.

He proclaims his tariffs are merely “reciprocal.” “They do it to us, and we do it to them,” Trump said. “Very simple.”

But are the new levies on foreign goods sold in the U.S. truly “reciprocal”?

No, not by any commonly agreed definition of the term.

“A ‘reciprocal’ tariff is one that is equal to the tariff rate charged on our exports to them,” Brad DeLong, a professor of economics at UC Berkeley, said via email. “Vietnam’s tariff on our exports . . . averages 10%. That is not the 46% rate that Trump has imposed” on Vietnam.

The Trump administration tariffs are not even based on the tariffs other countries impose. Instead, they are derived using a novel calculation that focuses on America’s trade deficits with other nations. And the levies Trump said he intends to impose on goods will often be much higher than the ones they charge on American imports.

Here’s how the Trump administration calculated the new tariffs: It took the U.S. trade deficit with individual trading partners, then divided it by U.S. imports from that partner. It then divided that total in half. Thus, Trump claims that his tariffs are not only reciprocal but “discounted.”

Trump’s acknowledgment that the calculations were not based on other nations’ tariffs alone is demonstrated in one of his social media posts. A chart laying out the new tariffs contends the charges by other nations include “currency manipulation and trade barriers.” To Trump, the new duties are “reciprocal” because they respond to another country’s actions, even if the new U.S. tariffs are much higher.

What the post does not acknowledge is that a substantial portion of the advantage other nations have in trade is tied to lower operating costs, particularly the lower wages and benefits that their workers earn, which are unrelated to tariffs.

Commerce Secretary Howard Lutnick insisted that the charges will pay dividends in the long run, as foreign companies — stung by the tariffs — decide to move their factories to the U.S. “Global governments have backed taking our factories away from us,” Lutnick told Newsmax. “But what you’re going to see is the most modern factories of the world come back here.”

Trump has insisted that by effectively raising taxes on imports from other countries, he will help drive down America’s trade deficit. Most economists polled on that notion aren’t buying it.

Fifty-eight percent of the economists surveyed by the Kent A. Clark Center for Global Markets at the University of Chicago disagreed with the claim that America’s trade deficit would grow smaller because of the higher tariffs. Forty-one percent said they were unsure. Only 1% of economists said they thought the Trump move would improve America’s balance of trade.

Trump’s view of international trade is also overly simplistic in that it attends only to the material goods the U.S. sells overseas and how much other nations sell in the U.S. without accounting for professional services that America sells in other countries, said Jesse Rothstein, another UC Berkeley economist.

“With many of these countries, and generally with the world, we have a trade surplus when it comes to services,” Rothstein said. “So they send us cheap clothing and we send them accounting services. It’s a good deal. We would much rather be getting paid as accountants than getting paid as garment workers.”