The benchmark index dropped more than 400 points at close to 24,608.98 after Trump said the measures could be formally announced next week.
Asian markets followed suit on Friday, with the Nikkei 225 down 2.5% and the Hang Seng off 1.56%.
Much of the talk up until now has been about how the indefinite 25% tariff on steel and 10% tariff on aluminium could affect US-China trade relations, but a note from Wood Mackenzie analyst He Ming indicated it was other nations, including the US, that would be hardest hit.
"In 2017, the US imported 35.6 million tonnes of steel, around 36% of its consumption, equivalent to about US$33.6 billion. China accounted for about 2.9% of US total imports, but this volume was only 1.4% of China's total exports at 74.82 million tonnes.
"Thus, the steel tariffs will not have much impact on Chinese steel exports and China does not have as much to lose as the traditional US trading partners," he said.
The protectionist measures are likely to have a bigger impact on steel imports from Canada, Brazil and Mexico, according to Ming. The three accounted for close to 40% of US imports in 2017, with Canada leading the way with 16.7%.
In terms of Asian steel imports, South Korea has the most to lose from this policy. The nation accounted for 9.7% of US imports last year at close to 3.5 million tonnes.
According to the World Steel Association, South Korea produced 71.1Mt of steel last year.
If Trump does install these policies, there is likely to be serious pushback from its trading partners.
South Korea has already gone to the World Trade Organisation about five anti-dumping duties and countervailing measures imposed by the US, and others are expected to follow suit.
In the meantime, Barclays was quoted by Bloomberg as saying the tariffs could reduce US growth by as much as 0.2 of a percentage point this year.
There is a but.
Seth Rosenfeld from US investment bank Jefferies said the lack of a formal tariff announcement from Trump came "as a modest surprise".
"It seems clear to us that any delay opens the door to aggressive pushback from domestic steel consumers who are preparing to be royally smacked by steel suppliers," he said.
The next few days will see the US targeted by aggressive retaliatory measures from overseas trading partners, according to Rosenfield, with the likely outcome being a more "nuanced final policy outcome than that proposed by Trump today".
A study by international law firm Gowling WLG called "Global Protectionism: Are You Leaving Yourself Open?" said the US has the biggest protectionist stance across the world, with more protectionist measures expected in the coming years.
World Trade Alert data found the country has made 1,085 more protectionist measures than it made liberalising ones since 2009.