The KBW Nasdaq Bank Index dropped 6% and was on pace to enter correction territory, marked by a decline of at least 10% from a recent high.
The SPDR S&P Regional Banking ETF slid nearly 5%.
The declines were sharper than for the broader market, with the S&P 500 down nearly 2%.
Economists warn that tariffs will push up prices for American businesses and consumers. That could weigh on loan growth at banks, cause borrowers to fall behind on payments and put upward pressure on interest rates, analysts say.
