Any hopes of a relief bounce for Australian shares were crushed in early trading on Wednesday, with the benchmark S&P/ASX200 sliding 118.8, or 1.51 per cent in just an hour of trading to 7771.3.
The sell off equates to more than $38 billion wiped from the top 200 stocks' combined $2.6 trillion market cap.
The Broader all Ordinaries was down 117.7 points, or 1.45 per cent, to 7986.5.
The plunge follows a continued sell off on Wall St overnight, as the US president threatened to double the steel and metal tariffs to 50 per cent for Canada, before walking the comments back.
The S&P500 was down 0.76 per cent, after briefly dropping to 10 per cent below its all-time-high into technical correction territory. The Dow Jones Industrial Average closed 1.14 per cent lower, while the tech-heavy Nasdaq lost 0.18 per cent, after giving up nearly 4 per cent on Monday.
The Australian government is still trying to negotiate a carve-out from tariffs for Australian steel and aluminium, after the duties went ahead without exceptions.
To make matters worse, Australia recorded its first monthly trade surplus since the 1980s in January, making any exclusion less palatable to the US.
"It is a bad decision and Americans will also pay the price," Foreign Minister Penny Wong said.
"We think it is unprovoked and unjustified."
The trade war and its erratic implementation has sent shockwaves through global markets, and soft US economic data from has investors concerned about future growth in the world's largest economy.
"According to US investment bank Goldman Sachs, the chance of a US recession over the next 12 months has increased from 15 per cent to 20 per cent," IG Markets analyst Tony Sycamore said.
"If President Trump and Co. continue in the manner they have started, it won't be long until it's a coin toss - closer to 50 per cent."
All 11 sectors on the local bourse were trading in the red, with health care and consumer discretionary stocks both bleeding more than two per cent lower.
Materials and financials stocks, which by market cap make up more than half of the Australian share market, were down 0.8 per cent and 1.3 per cent respectively.
Iron ore giants BHP and Rio Tinto were both trading lower, down 0.9 per cent and 1.9 per cent respectively.
The big four banks were all down more than one per cent, with Australia's biggest company the Commonwealth Bank down 1.5 per cent to $144.79 per share.
The Australian dollar was buying 62.94 US cents, up slightly form 62.68 on Tuesday at 5pm.
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