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US stocks cratered on Thursday in their worst one-day sell-off since 2020, with the Dow tumbling almost 1,700 points as President Trump's surprisingly steep "Liberation Day" tariffs sent shockwaves through markets worldwide.

The tech-heavy Nasdaq Composite ( ^IXIC ) led the sell-off, plummeting 6%. The S&P 500 ( ^GSPC ) sank nearly 5%, while the Dow Jones Industrial Average ( ^DJI ) tumbled 4%. The Dow's 1,700-point drop was the fifth-worst in its history.

Megacap tech stocks were clobbered: Apple ( AAPL ) shares fell over 9% amid concerns about disruption to its supply chain. China, the source of key iPhone components, was hit with additional US tariffs that raised its overall rate to 54%.

Nvidia ( NVDA ) and other chip stocks also tumbled thanks to similar concerns, with the AI chip leader sliding over 7%. The so-called "Magnificent Seven" stocks that led the market rally over the past two years shed over $900 billion in market cap.

Small-cap stocks were also hit during the session, as the Russell 2000 ( ^RUT ) index declined more than 6.4% to close in bear market territory.

The 10-year Treasury yield ( ^TNX ) fell about 14 basis points to close at 4.05%, its lowest level since October 2024. Meanwhile the US dollar index ( DX-Y.NYB ) tumbled 1.5% to 101.92, also its lowest level since October 2024.

The two-step approach to tariffs unveiled by Trump on Wednesday imposes a baseline rate of 10% on all US trading partners but applies extra duties to countries considered "bad actors" on trade — meaning they face much higher rates. The levies go into effect on April 5 and April 9, respectively.

In total, some 185 counties are impacted by the tariffs , and the new duties set the effective US tariff rate at its highest level in over 100 years.

Read more: The latest on Trump's tariffs

For his part, Trump downplayed the market reaction. In response to a question about the market sell-off Trump claimed that markets will eventually "boom."

But stocks around the world sold off as the likelihood of retaliation from trading partners fueled fears of a full-on trade war and a severe hit to global growth. The pan-European benchmark Stoxx 600 ( ^STOXX ) sank over 2.5%, while Japan's Nikkei 225 ( ^N225 ) slumped 2.7% to its lowest level since August.