European Markets Drop as Trump Tariffs Spark Global Selloff

European stocks retreated sharply on Monday, mirroring a global selloff as investors feared an escalating trade war after U.S. President Donald Trump imposed new tariffs on China, Canada, and Mexico.

Market Reaction:

• STOXX 600 index fell 1.4% by 0810 GMT
• S&P 500 futures dropped 1.3%, signaling a weak Wall Street open
• Germany’s DAX led the losses, falling nearly 2%
• UK’s FTSE 100 declined 1.1%, despite Trump suggesting Britain could avoid tariffs

Key Sectors Hit Hard:

• Automakers tumbled 3.5% on trade fears:
  • Porsche, BMW, Volkswagen, Mercedes-Benz, and Stellantis fell 3.7% to 6.5%
• Technology stocks fell 2.5%, led by:
  • ASML Holding, down 2.8%, dragging the sector lower
• Eurozone bond yields declined, with Germany’s 2-year yield falling 6 basis points to 2.056%, as investors sought safety

Why Markets Are Falling?

• New Trump tariffs:
  • 25% duties on Canadian and Mexican imports
  • 10% tariffs on Chinese goods
• Threat of European tariffs:
  • Trump stated tariffs on Europe will “definitely happen” but did not provide details
• Global trade war fears:
  • Investors fear retaliatory tariffs, potentially hurting corporate profits and economic growth

Looking Ahead:

• Markets remain cautious as investors await clarity on Trump’s tariff plans for Europe
• Corporate earnings and central bank policies will be closely monitored for potential market support
• Bond yields suggest a shift to safe-haven assets, signaling growing economic uncertainty