Europe open: Stoxx slides as Trump tariff threat spooks investors
By Frank Prenesti
Date: Monday 03 Feb 2025
(Sharecast News) - The Trump tariff rampage hit European markets at the open on Monday with stocks sharply lower after the new US President threatened the European Union with new import levies after doing the same to China, Canada and Mexico.
The pan-regional Stoxx 600 index was down 1.24% at 532, ending a bullish run last week that saw the benchmark index hit record highs, along with indices in Germany and the UK.
Germany's DAX index fell as much as 2% at the open, while France's CAC 40 slumped 1.9%, Spain's IBEX 1.7% and Italy's FTSE MIB 1.4%.
Automakers, expected to bear the brunt of tariffs, were all hit hard. Shares in French car parts supplier Valeo were down almost 7% in early trade. Renault, BMW, Volkswagen, Daimler Truck, Stellantis and Porsche were all lower.
Trump over the weekend said he would hit the EU with tariffs, reheating old grievances about the bloc not importing enough US vehicles and agricultural products. The 27-member EU has said it would retaliate if Trump follows through on his threats.
"Stocks slipped as investors reacted to Donald Trump's tariffs. It's less of a negotiating tactic than a sledgehammer," said TipRanks analyst Neil Wilson.
"The euro also skidded lower as markets don't think this is the end of things. The question is whether this is the beginning of a damaging trade war or something less sinister. It seems from the selling pressure that the market underestimated Trump - not for the first time."
"But whether this is resolved in short order or drags out and spirals is unknown. If the tariffs stay in place it would mean a significant redrawing of trade terms and currencies will need to adjust to reflect that. Trump is due to speak to the leaders of Canada and Mexico today - a sliver of hope, perhaps?"
Reporting by Frank Prenesti for Sharecast.com
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