WASHINGTON/OTTAWA (Reuters) -U.S. trading partners threatened to ratchet up a trade war with the United States on Thursday as President Donald Trump's sweeping tariffs ignited fears of steep price hikes in the world's largest consumer market.

The penalties announced by Trump on Wednesday triggered a plunge in world markets and drew condemnation from other leaders reckoning with the end of a decades-long era of trade liberalization. 

But there were conflicting messages from the White House about whether the tariffs were meant to be permanent or were a tactic to win concessions, with Trump saying they "give us great power to negotiate."

The U.S. tariffs would amount to the highest trade barriers in more than a century: a 10% baseline tariff on all imports and higher targeted duties on some of the country's biggest trading partners. 

That could jack up the price of everything from cannabis to running shoes to Apple's ( AAPL ) iPhone for U.S. shoppers.

Businesses raced to adjust. Automaker Stellantis ( STLA ) said it would temporarily lay off U.S. workers and close plants in Canada and Mexico, while General Motors ( GM ) said it would increase U.S. production.

Canadian Prime Minister Mark Carney said the United States had abandoned its historic role as a champion of international economic cooperation.

"The global economy is fundamentally different today than it was yesterday," he said as he announced a limited set of countermeasures.

Elsewhere, China vowed retaliation for Trump's 54% tariffs on imports from the world's No. 2 economy, as did the European Union, which faces a 20% duty.

French President Emmanuel Macron called for European countries to suspend investment in the United States.

Other trading partners, including South Korea, Mexico and India, said they would hold off for now as they seek concessions.

Washington's allies and rivals alike warned of a devastating blow to global trade.

The tariffs "clearly represent a significant risk to the global outlook at a time of sluggish growth," IMF Managing Director Kristalina Georgieva said in a statement.

"It is important to avoid steps that could further harm the world economy. We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty."

U.S. Commerce Secretary Howard Lutnick and senior trade adviser Peter Navarro both told cable news programs on Thursday the president would not back off, and that the tariff increases were not a negotiation.

Trump then appeared to contradict them, telling reporters, "The tariffs give us great power to negotiate. Always have. I used it very well in the first administration, as you saw, but now we're taking it to a whole new level, because it's a worldwide situation, and it's very exciting to see."

Stocks suffered a global meltdown, as analysts warned the tariffs could upend global supply chains and hurt corporate profits.

The Dow fell nearly 4%, its biggest one-day loss in percentage terms since June 2020. The S&P 500 lost nearly 5% and the tech-heavy Nasdaq declined nearly 6%, its worst day in percentage terms since the pandemic era of March 2020.

American companies with significant overseas production took a hit. Nike shares lost 14% and Apple ( AAPL ) fell 9%.

Imports to the United States now face an average duty of 22.5%, up from 2.5% last year, according to Fitch Ratings.

Trump says the "reciprocal" tariffs are a response to barriers put on U.S. goods, though his list of targets includes uninhabited Antarctic islands and some of the world's poorest countries, which now face tariffs approaching 50%.

Administration officials said the tariffs would create manufacturing jobs at home and open up export markets abroad, though they cautioned it would take time to see results.

Since returning to the White House in January, Trump's on-again, off-again tariff threats have rattled consumer and business confidence. Trump could step back again, as the reciprocal tariffs are not due to take effect until April 9.

"The tariff plan does not appear to be well thought-out. Trade negotiations are a highly technical discipline, and in our view these proposals do not offer a serious basis for negotiations with any country," said James Lucier, founding partner at Capital Alpha.

Economists say the tariffs could reignite inflation, raise the risk of a U.S. recession and boost costs for the average U.S. family by thousands of dollars - a potential liability for a president who campaigned on a promise to bring down the cost of living. 

Trump predicted financial markets would recover with a "boom." Some White House officials on Thursday appeared resigned to the stock market drop - one official called it a "temper tantrum" - while another said the administration was looking at the medium- and long-term, not daily market moves.

Analysts said the tariffs could also alienate allies in Asia and undercut strategic efforts to contain China. 

Trump has slapped a 24% tariff on Japan and a 25% tariff on South Korea, both home to major U.S. military bases. He also hit Taiwan with a 32% tariff as the island faces increased military pressure from China.

Canada and Mexico, the largest U.S. trading partners, were not hit with targeted tariffs on Wednesday, but they already face 25% tariffs on many goods and now face a separate set of tariffs on auto imports.

(Reporting by Reuters newsrooms; writing by Andy Sullivan and Daniel Trotta; Editing by Sharon Singleton, Alistair Bell and Nia Williams)