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European markets traded cautiously on Tuesday, weighed down by fresh U.S. tariffs and fears of a looming government shutdown in Washington.
At 07:02 GMT, Germany’s DAX slipped 0.2%, France’s CAC 40 dropped 0.2%, while the U.K.’s FTSE 100 managed a 0.1% gain.
Trump’s Tariff Escalation Adds to Global Growth Worries
U.S. President Donald Trump announced fresh import tariffs late Monday, targeting lumber, furniture, and kitchen fittings.
- 10% on softwood lumber and timber
- 25% on kitchen cabinets and vanities
- 25% on upholstered wooden products
This comes on the heels of a 100% levy on pharmaceutical imports unveiled last week, underscoring Trump’s strategy to bolster U.S. manufacturing and reduce reliance on imports.
The tariffs are scheduled to take effect on October 14, intensifying trade uncertainty at a time when Asia’s largest economies are already showing strain.
- China’s manufacturing activity contracted for a sixth straight month in September.
- Japan’s factory output fell more than expected in August.
European Economic Data in Focus
Back home, regional data reflected sluggish momentum:
- German import prices fell 1.5% year-on-year in August.
- The U.K. economy grew 0.3% in Q2, in line with earlier estimates but sharply down from 0.7% growth in Q1.
U.S. Shutdown Risks Dominate Investor Mood
Markets are also bracing for the possibility of a federal government shutdown, as negotiations between President Trump, Republicans, and Democrats on funding broke down on Monday.
If no stopgap bill is passed before the September 30 deadline, this would mark the 15th partial shutdown since 1981. A prolonged closure could delay Friday’s nonfarm payrolls report, depriving investors and the Federal Reserve of a key data point for future rate-cut decisions.
In the meantime, traders will closely track today’s JOLTS job openings report for further clues on labor market health.
Corporate and Commodity Updates
- Pandora: Danish jeweler announced CEO Alexander Lacik will retire in March 2026, to be succeeded by Berta de Pablos-Barbier.
- A.G. Barr: The Scottish soft drink maker posted a 20% rise in H1 profit before tax, driven by margin gains and strong demand for its Boost brand.
Oil markets remained under pressure:
- Brent crude fell 0.5% to $66.76/barrel.
- WTI crude dropped 0.4% to $63.20/barrel.
Both contracts were on track for monthly losses as OPEC+ signals another output hike of at least 137,000 bpd in November, following a planned October increase.
