The S&P/ASX200 had fallen by 72.5 points, or 0.84 per cent, to 7447.1 at noon on Wednesday as the broader All Ordinaries lost 71.1 points, or 0.92 per cent, to 7633.
The two indexes narrowed losses after shedding as much as two per cent each in the first hour of trade.
The sell-off came after another volatile Wall Street session that finished in the red with the White House confirming country-specific tariffs will take effect from 2.01pm AEST on Wednesday, including hiking tariffs on China to 104 per cent.
The S&P500 index had rallied as much as four per cent but was 1.6 per cent in the red by the close, which finished below 5,000 for the first time in nearly a year.
The benchmark index has lost $US5.8 trillion ($A9.8 trillion) from its combined market cap since the 'Liberation Day' tariffs were announced on April 2.
"Global markets are on eggshells, and we can't rule out that US and Australian market losses could swell to 37 per cent or thereabouts, as happened during the pandemic," Moomoo market analyst Jessica Amir said.
"That's because we have many unknowns now, just as we did back then."
The early slide on the Australian market wiped almost one-third of Tuesday's 2.3 per cent relief bounce, leaving the key S&P/ASX200 down almost 14 per cent from mid-February's 8,615 all-time high.
Nine of 11 local sectors were in the red, with materials and energy stocks leading losses, down more than 2.7 per cent each as concerns over China's growth and demand for oil and minerals weighed heavily.
BHP and Rio Tinto tanked more than 4.7 per cent each in early trading, but losses had narrowed to 3.2 per cent and 4.4 per cent by lunchtime.
The US-China worries also sent oil prices plummeting, with Brent crude futures down more than six per cent since 5pm on Tuesday to $US60.68, a four-year low.
The slump weighed on oil and gas giants Santos and Woodside, down 3.6 per cent and 2.5 per cent respectively.
Financial stocks pared early losses to trade 0.5 per cent higher by lunchtime as NAB soared 1.8 per cent and CBA ground through early losses to trade 0.7 per cent higher.
The traditionally defensive consumer staples sector was down 0.9 per cent, despite the competition regulator standing back from Woolworths' planned takeover of food manufacturer Beak & Johnston. Woolies shares were down 0.7 per cent to $31.02 by midday.
Mineral Resources was the top 200's worst performer, down more than 11 per cent as debt concerns and bleak growth expectations for China weigh on the lithium and iron ore miner.
GQG Partners was leading the local benchmark index, up 2.8 per cent after receiving net inflows of $US1.8 billion ($A3 billion) in March.
The Australian dollar has again lost the 60 US cent level and is buying 59.96 US cents, down from 60.59 US cents on Tuesday at 5pm.
The Aussie has lost 7.5 per cent of its value against the greenback and has been the worst performer against major currencies since the 'Liberation Day' tariff announcement on April 2.
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