Wall Street lost momentum before the opening bell Tuesday and markets in Europe and Asia slid after new tariffs were imposed by U.S. President Donald Trump, and more retaliatory tariffs were announced by China.

A private survey showed American factory activity last month edged closer to stagnation—slowing growth combined with faster inflation—as new orders and employment contracted. A gauge of prices paid for materials jumped to the highest since June 2022. So how should investors react to all this smoke on the horizon?