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(Reuters) - U.S. President Donald Trump further escalated a trade war on Wednesday by announcing he would impose reciprocal tariffs to match duties put on U.S. goods by other countries.

"It's our declaration of independence," Trump said at an event in the White House Rose Garden. "We will establish a minimum baseline tariff of 10%."

Rates for China would be set at 34%, while the European Union and Japan would face 20% and 24%, respectively.

MARKET REACTION: S&P 500 futures tumbled 3%, suggesting investors expect deep losses when Wall Street opens on Thursday. Other stocks markets around the world and Treasury yields fell too, while China's yuan dropped to a one-month low.

COMMENTS:

NIGEL GREEN, CEO, DEVERE GROUP, DUBAI, UAE

“This is how you sabotage the world’s economic engine while claiming to supercharge it. It’s a seismic day for global trade.

"Tariffs are taxes, plain and simple, and American consumers will bear the brunt. When businesses don’t know what trade will look like next quarter, they stop hiring, stop investing, and freeze plans. That ripples through to consumers. This chilling effect is how recessions begin.

"The dollar’s dominance is also no longer a sure thing. America’s credibility is on the line. With the dollar as the global reserve currency, any whiff of unpredictability or politicized policy makes global investors nervous. That trust is hard-earned and easily lost.”

SCOTT WREN, SENIOR GLOBAL MARKET STRATEGIST, WELLS FARGO INVESTMENT INSTITUTE, ST LOUIS, MISSOURI

"Really, there's not a lot of surprises here. I am a little surprised that it's a little less than what we thought potentially.

"We’ve wanted to be invested in the U.S. relative to international and that’s not going to change. We like large cap... Now we're also overweight midcaps… On this pullback here, our outlook is not wildly positive but it’s positive. So we're trying to gain some cyclical exposure here. We're not trying to hide. We don’t want to get defensive. We want to take advantage of stock pullbacks to buy stocks and play what we perceive to be a better second half.”

OLGA YANGOL, MANAGING DIRECTOR, HEAD OF EMERGING MARKETS RESEARCH AND STRATEGY, AMERICAS, CREDIT AGRICOLE CIB- AMERICAS, NEW YORK

"The baseline tariff number, I don't think, should be a surprise to the market. We have to cycle through the individual countries and the impact on them all.

"It seems that, at least on the surface, that Brazil is getting off fairly easy ... With Mexico it's not fully clear, what will really matter is whether those USMCA exclusions are actually being extended. We are underweight MXN, our overall directional view on the dollar versus (emerging markets) is neutral, maybe slightly defensive."

OLGA BITEL, GLOBAL STRATEGIST, WILLIAM BLAIR & CO, CHICAGO

"Now the question is whether U.S. exceptionalism is about to change and if so, where that leadership will migrate to. There are plenty of places in the world with the capacity and the will to respond (to the tariffs) and those places will respond.

"I don’t think we’re in for a period of stability or clarity, rather, I see this as an opening salvo and I expect to see a lot of back and forth. Hanging over all of this is the question of whether or not the U.S. has the capacity to implement these tariffs, given that there are different rates on different products from different countries.”

ERIC M. CLARK, CHIEF INVESTMENT OFFICER, ALPHA BRANDS PORTFOLIO MANAGER, SAN DIEGO, CALIFORNIA

"These tariffs will surely push consumers in China and other countries to consume more of their own products or other brands. This is a very dangerous game because when consumers are forced to change, most of the time they get used to the new products and never go back.

"We are pushing nationalism further in these local markets. Between the tone of how Trump talks about other countries and leaders and the nationalism that will come, he’s decided to take a isolationist approach, when the S&P 500 companies have more than 40% of revenues from outside the U.S. This raises the risk of recession here even higher.

"I still expect that this self-created chaos is designed to create panic, and the uncertainty drives yields down at the time when demand for our debt is high, allowing us to refinance about $4 trillion to $5 trillion at much better rates. Then, over the next month or two, mysteriously the tariff deals start getting walked back and we get more certainty allowing the stock market to rally significantly."

JEANETTE GERRATTY, CHIEF ECONOMIST, ROBERTSON STEPHENS, MENLO PARK, CA.

“The tariffs are so comprehensive and so much larger than we expected. People were talking earlier about whether clarity would boost the market. But now you have clarity, and no one likes what they see.

"The bottom line is that anything that anyone says today does not qualify as analysis, but there’s no question that speculation on whether this will slow growth and raise prices is no speculation: that is what will happen.”

MICHAEL MULLANEY, DIRECTOR OF GLOBAL MARKETS RESEARCH, BOSTON PARTNERS, BOSTON

“We have some detail now, this clarity. But once you actually dig into the numbers, the clarity is not as friendly as a 10% baseline would lead you to believe.

“It means that we're most likely going to see continued erosion in S&P 500 earnings per share expectations for 2025 and probably spilling over into 2026.”

SARAH KETTERER, CEO, CAUSEWAY CAPITAL MANAGEMENT, LOS ANGELES

“This is a salvo, this isn’t the final list ... it’s just another in what will be many rounds of negotiations.

"Market weakness globally should give you an opportunity to own global equity markets... European spending will be enormous and pivotal, and very stimulative especially if it’s combined with more bank lending. It’s not ‘Happy Days,’, but it does give global equities an opening to outperform, especially European equities that have lagged U.S. stocks for the last 17 years. We think some of that gap will be closed.”

BYRON ANDERSON, HEAD OF FIXED INCOME, LAFFER TENGLER INVESTMENTS, SCOTTSDALE, ARIZONA

"Reciprocal tariffs will ultimately be deflationary as our trade partners will start eliminating tariffs. Market positioning is offside if we did get moderation and we should see the unwind of the flight to safety and that means treasury yields are going higher, but we expect a calming of both investment grade high yield credit spreads. Expect volatility to continue as certain countries will continue to defend the status quo."

JOHN HARDY, CHIEF MACRO STRATEGIST, SAXO BANK, COPENHAGEN

“This is pretty negative relative to expectations... it makes sense to see the market reaction.

"Safe haven trades in the wake of the announcement will include the Japanese yen most definitely, repatriation of capital, into Japan, falling U.S. rates, definitely. So Treasuries can be a safe haven, especially at the short end of the yield curve, I think would be the two chief trades. But even the longer-term Treasuries could do well.

"If Republicans keep banging on about tax cuts, I wonder if that's (longer-term Treasuries) a good bet. But for now, it seems the direction is clear. So the safest of safe just for parking things, gold, and especially short-dated U.S. Treasuries, and then maybe a wild card there for longer-term stuff as well.”

JASON BRITTON, CHIEF INVESTMENT OFFICER, REFLECTION ASSET MANAGEMENT, CHARLESTON, SOUTH CAROLINA

“I see this as net positive. For the most part, these tariff levels are just the starting point for further negotiations. And Mexico and Canada are still exempt from further tariffs. I think the market will settle down and begin to parse the details and realize it’s at worst a mixed bag of news."

"I’m looking at the big technology companies that are sitting on enormous piles of cash. If they’re going to get pinched by this retreat, I’m a buyer on weakness. It’s just the market over-reacting, and I’m very happy to take advantage of that.”

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“The tariffs are a little bit on the hefty side. The consequences of inflation will be felt, and that presents a dilemma for the Federal Reserve now, even though Chairman Powell has said that inflation from tariffs would be transitory... The inflation effects could get worse and we could be headed toward recession.

"The markets have been under severe pressure and you might say they are somewhat in an oversold condition ... I think the markets could rally."

(Compiled by the Global Finance & Markets Breaking News team; Editing by Lincoln Feast.)