US bank stocks plunged Thursday following President Trump’s sweeping tariff announcement as concerns mounted about how the biggest names in finance might be affected by heightened odds of a US recession.

An index tracking the US banking industry ( ^BKX ) fell roughly 10% Thursday, its worst day since a regional bank crisis roiled the industry in March 2023.

The individual stocks of the country’s largest banks also dropped. JPMorgan Chase ( JPM ), Wells Fargo ( WFC) , Citigroup ( C ), Goldman Sachs ( GS ), Morgan Stanley ( MS ), and Bank of America ( BAC ) were down between 7% and 12%.

Banks were far from the only part of the financial sector that got hit Thursday. The stocks of major private equity firms Apollo Global Management ( APO ), Ares Management ( ARES ), Carlyle Group ( CG ), and KKR ( KKR ) all fell between 12% and 16%. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)

The industrywide pullback is the latest example of how Trump’s second term is not starting the way many on Wall Street expected.

Hopes for an IPO bonanza and dealmaking boom are being put to the test due to uncertainties surrounding the Trump administration’s trade policies.

Read more: What Trump's tariffs mean for the economy and your wallet

And now market watchers are increasing the odds of a US recession and rising inflation, both of which will create new challenges for the banks and their customers.

Even before Trump’s announcement this week, Wells Fargo’s bank analyst Mike Mayo had lowered his median earnings estimate for big banks by 4% for the first quarter and by 2% over the next two years.

The key reason is "paralysis from policy uncertainty" that makes it tough for core chunks of both their Wall Street investment banking and Main Street lending businesses, according to Mayo.

"The concern is paralysis to the extent that policy changes so quickly that can cause paralysis for expansion, plant and equipment, inventory builds, mergers, you name it," Mayo told Yahoo Finance earlier this month.

These biggest US banks will have a chance to update investors on how the tariffs may affect their business next Friday as JPMorgan, Wells Fargo, and Morgan Stanley release their first quarter results.

Goldman Sachs, Bank of America, and Citigroup will share their results the following week.

Some bank analysts said the biggest lenders will be able to weather the current turmoil and may still be able to benefit from Trump-era policies.

“Banks will certainly get through this successfully, I think,” Piper Sandler analyst Scott Siefers told Yahoo Finance.