The S&P/ASX200 fell 149 points, or 1.98 per cent, to 7361, as the broader All Ordinaries lost 153.1 points, or 1.99 per cent, to 7554.1, equating to almost $50 billion wiped from the top 500.
The move followed another volatile Wall Street session, which resolved to the downside, after the White House confirmed country-specific tariffs - including a 104 per cent, counter-retaliatory tariff on China - will take effect from 2.01pm AEST on Wednesday.
"This led the S&P500 to close below 5,000 for the first time in nearly a year, losing a cool $US5.8 trillion ($A9.8 trillion) in market cap since Trump's 'Liberation Day' tariff announcement last Thursday," IG Markets analyst Tony Sycamore said.
The benchmark index had surged as much as four per cent during the session but was 1.6 per cent in the red by the close.
The early slide on the Australian wiped out most of Tuesday's 2.3 per cent relief bounce, leaving the key S&P/ASX200 down nearly 15 per cent against mid-February's 8615 all-time high.
All 11 sectors were in the red, with materials stocks leading losses, down more than three per cent as BHP and Rio Tinto tanked more than 4.7 per cent each, as investors weighed the impacts of escalating tariffs on China's future demand for iron ore.
The US-China worries also sent oil prices plummeting, with Brent crude futures down more than five per cent since 5pm Tuesday to $US61.04 - a four-year low.
The slump weighed on the local energy sector, which was down 3.5 per cent.
Financial stocks were also bleeding, down 1.5 per cent and all big four banks down at least one per cent each.
Despite the river of red, investors needed to remember that stock markets tended to fall around 20 per cent every four years, and ten per cent each year, Schroders head of strategic research Duncan Lamont said.
"For most investors, the best course of action will be to stay calm, stick to your plan and - rather than be scared by volatility - be alive to the opportunities that it may present," Mr Lamont.
"The simple reality is that the stock market has tremendous power to help grow wealth in the long-run but short-term volatility and risk of falls are the price of the entry ticket."
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