The move sparked immediate countermeasures by Mexico and Canada, while the European Union threatened a similar response, throwing up the prospect of a painful conflict between some of the world's biggest economies.
French President Emmanuel Macron labelled the move "illegal".
It also overshadowed news that Italy's populist parties had reached a deal to revive a coalition government and avoid a snap election that many had feared could be used as a referendum on the country's euro membership.
"While markets overreacted to the Italian mess a couple of days back, it strikes me they might be under-reacting to the real -- distractive -- negatives of this trade skirmish developing into a trade war," said Greg McKenna, chief market strategist at AxiTrader.