By lunchtime, the S&P/ASX200 was down 112.9 points, or 1.46 per cent, to 7596.7, while the broader All Ordinaries fell 110.9 points, or 1.40 per cent, to 7803.
The slip on Friday came after a broad-based sell-off on Wall Street overnight, after the S&P500 fell 3.46 per cent, the tech-led Nasdaq lost 4.31 per cent and the Dow Jones Industrial index shed 2.50 per cent.
"The roller-coaster ride for Wall Street this week continued as US stocks reversed a chunk of Wednesday's relief rally on concerns over escalating trade tensions between the US and China and recession," IG Markets analyst Tony Sycamore said.
In a further worrying sign, bond yields again shot up overnight, indicating further discomfort and dislocation in debt markets and falling confidence in US treasuries.
Markets had rallied the day before when US President Donald Trump announced a 90-day delay for the bulk of his "liberation day" tariffs while escalating taxes on Chinese imports to 125 per cent.
The White House later clarified the effective tariff on Chinese goods was 145 per cent, including an earlier 20 per cent impost the US linked to China's purported role in the fentanyl trade, sending markets reeling.
Ten of 11 local sectors were trading lower by midday, with only the defensive consumer staples in the green with a 0.5 per cent lift.
Energy stocks led the losses, down 2.9 per cent, as trade war worries weighed on oil prices, with Brent crude futures falling three per cent overnight to below $US63 per barrel.
Financial stocks were down 2.3 per cent with all big four banks in the red, with NAB and ANZ both down more than 3 per cent each, followed by Westpac and CBA, which were 2.8 per cent and 1.8 per cent lower.
Materials stocks were trading one per cent lower as global growth concerns again dragged on miners, with BHP losing 2.2 per cent and Rio Tinto 1.8 per cent in the red.
Gold miners were an exception with Northern Star up 3.9 per cent and 10 smaller-cap competitors leading the top 200 as investors ducked for cover.
Gold futures broke convincingly above $US3200 per ounce for the first time.
The Australian dollar is buying 62.39 US cents, up from 61.94 at 5pm on Thursday, after US inflation figures came in slightly lower than expected.
The Aussie had been plumbing the 60 US cent level for most of the week.
As the trade war between China and the US escalates, ANZ economists have tipped the Reserve Bank will cut interest rates by 75 basis points by the end of the year, although the tariff delay reduced the likelihood of a 50 basis point cut in May.
"The confidence impacts of the recent and ongoing trade policy volatility will put downward pressure on global activity and investment in the near term, regardless of the outcomes," the economists wrote in a research note.
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