U.S. markets pitched deeper into a downward spiral Friday morning over fears of a trade war.

The Dow Jones industrial average dropped more than 350 points — a 1.4 percent decline — in morning trading before making up ground in the early afternoon. That followed a 420-point drop Thursday.

The Standard & Poor’s 500-stock index dropped about 1 percent in early trading Friday, as did the tech-heavy Nasdaq Composite. Both recovered their losses by lunchtime.

Investors across the globe signaled anxiety about President’s Trump pledge to impose tariffs on imports — 25 percent on steel and 10 percent on aluminum — and the prospect that it could trigger a global trade war.

“Markets are responding to the very real economic damage to large sectors of the economy that the tariffs will cause,” said Brad McMillan, chief investment officer for Commonwealth Financial Network, which manages $156 billion in assets. “This is a rational response, based on clear economic factors.”

Trump doubled down on his position in a tweet Friday morning: “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.”

[ Trump insists ‘trade wars are good, and easy to win’ ]

Trade wars start when countries initiate protectionist measures such as tariffs and quotas to protect domestic industries from foreign competition. A tariff is essentially a tax on imports, designed to raise their price or limit their ability to sell in the U.S. by setting a quota.

Tariffs can result in higher prices passed to the consumer, spurring inflation. The other risk is that U.S. trading partners will react with their own tariffs and limits, which could injure U.S. domestic producers —  from agriculture to automobiles to technology.

Foreign leaders expressed alarm at the president’s decision. The biggest supplier of steel to the United States is Canada. Its officials said the steel and aluminum tariffs would be unacceptable. Canada “will take responsive measures,” Foreign Minister Chrystia Freeland said.

Alexander Winterstein, a spokesman for the European Commission, told reporters on Friday that “counter measures” would be swift, firm and proportional.

German politician Bernd Lange, who heads the trade committee at the European Parliament, declared: “With this, the declaration of war has arrived.” Lange called Trump’s logic for the tariffs “absurd” and said they “contradicted the reality of global trade relationships.”

Europe’s markets sustained losses, too. Germany’s blue-chip DAX and France’s benchmark index were both down 2 percent. In Asia, Japan’s Nikkei lost 2.5 percent. And Hong Kong’s Hang Seng Index dropped 1.5 percent.

Li Xinchuang, vice secretary general of the China Iron and Steel Association, called the tariffs “an extremely stupid move” and “a desperate attempt by Trump to pander to his voters, which I think in fact runs counter to his ‘America First’ pledge.”

Tariffs have some unhappy history in the United States. The starkest example may be the Smoot-Hawley Tariff signed into law in 1930, which was derided by economists but signed anyway by President Herbert Hoover. Smoot-Hawley raised tariffs on thousands of imports and, by discouraging free trade, is now viewed by many economists as a key contributor to the length and depth of the Great Depression.

Steel and aluminum are such basic commodities that critics fear a tariff could ripple through the U.S. economy, raising prices on vehicles, pipelines, boats, airplanes, locomotives and various industrial instruments. Because so many industries could be affected, the stock market reaction has been broad.

The Dow was already reeling from a 380-point decline on Wednesday on fears of continued interest rate hikes by the Federal Reserve. Fed Chair Jerome H. Powell spoke this week before Congress, where he left open the possibility of four rate hikes this year instead of three.

[ European officials offer brutal responses to Trump’s tariffs ]

Volatility has returned to markets this year after a relatively calm — yet robust — 2017. The Dow and S&P sank 10 percent into correction territory in early February on a positive Labor Department report on wages that inflamed Wall Street’s fears of inflation and coming rate increases.

When February ended on Wednesday with another seesaw day, the Dow and S&P were down. The negative month broke 10 consecutive months of gains, which is the longest uninterrupted stretch of gains since 1959.

By the close of Thursday, the Dow had lost 7.6 percent since its Jan. 26 peak. The 30-stock, Dow blue chip index is now in negative territory for 2018. The S&P 500 was holding barely positive for the year. The Nasdaq is still up a healthy 4 percent so far in 2018.

McMillan emphasized that for investors the fundamentals of the economy “remain sound” with steady growth and rising corporate profits.

“There is also the very real possibility — even likelihood, that this is more of a negotiating tactic than a firm policy proposal,” McMillan said. “While there are real concerns here, it is not yet time to panic, and the market’s response shows that, as well.”