Europe close: Stocks give up early gains as EU-US trade deal underwhelms
By Benjamin Chiou
Date: Monday 28 Jul 2025
(Sharecast News) - European stocks fell on Monday as the news of a trade deal between the EU and US fell flat, with early gain fully erasedby the close of play.
The Stoxx 600, which rose as much as 0.9% early on, finished 0.2% lower, with the FTSE 100 falling 0.6%, the DAX dropping 1.0% and the CAC slipping 0.4%.
A trade deal agreed between European Commission president Ursula von der Leyen and US president Donald Trump at the weekend failed to give markets a boost as the new trading week began.
The deal between the two trading partners means that the US will impose a 15% tariff on most EU imports, including autos, halving the 30% rate threatened by Trump.
Steel and aluminium still face 50% tariffs - but this will now only apply above certain quotas. Aerospace parts, some chemicals and raw materials will be exempt from any duties, while the EU will also agree to buy $750bn in US energy, and more military equipment.
"Fifteen percent tariffs might be the least worst option and provides companies with certainty, but it's a lot higher than might have seemed palatable just a few short months ago," said Danni Hewson, head of financial analysis at AJ Bell.
"Until the small print has been pored over and the global trading market settles into its new status quo it's hard to know exactly what the full impact of these tariff changes will be and how the deals struck to get trade agreements over the line will impact many companies' bottom lines."
In other news, economic data was thin on the ground on Monday, though comments from the EY ITEM Club were in focus in the UK, after the economic forecasting group upgraded its GDP growth forecast for 2025 to 1.0% from 0.8%, citing stronger-than-expected business investment in the first quarter. However, it warned that growth was likely to remain muted until 2027 amid global trade disruption and a fragile labour market.
Carmakers hit by tariff news
European carmakers including Volkswagen, Porsche, Mercedes-Benz and Stellantis were trading lower, along with defence companies Rheinmetall, Babcock International and BAE Systems, as investors reacted to the EU-US trade deal.
Airline stocks including IAG, easyJet, Air France-KLM and Deutsche Lufthansa were lower. News of disruption from East Midlands Airport, where flights are on hold following an emergency landing, may have weighed on sentiment, along with a cyberattack affecting Aeroflot after the Russian airline cancelled more than 50 flights.
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