European stock markets fall sharply on Trump’s EU tariff salvo
Stock markets across Europe dropped dramatically on Friday afternoon after Donald Trump announced plans to levy a 50 per cent tariff on all US imports from the European Union next month.
The FTSE 100 dropped as much as 1.35 per cent after the US President mooted the move in a post on Truth social in which he branded the bloc “very difficult to deal with”.
“Our discussions with them are going nowhere!” he wrote. “Therefore I am recommending a straight 50 per cent Tariff on the European Union, starting on June 1, 2025. There is no Tariff if the product is built or manufactured in the United States. Thank you for your attention to this matter!”
All of the continent’s major bourses fell sharply in response to the post. Germany’s blue-chip Dax was down by 2.5 per cent as of 2:45pm on Friday, with its carmakers, lenders and other major exporters leading the index’s biggest fallers.
The market capitalisation of Porsche and Mercedez-Benz Group fell by over five and 4.5 per cent per cent respectively, as traders factored in the chilling effect that levies will have on demand for their cars in the US.
Meanwhile lending giant Deutsche Bank and chemicals wholesaler Brenntag both posted falls of around five per cent.
France’s CAC fell by as much as 2.8 per cent within two hours of the announcement. Drinks conglomerate Pernod Ricard was the blue-chip index’s biggest loser, down as much as five per cent. Other exporters, like aerospace firm Safran and energy management group Schneider, both had over 2.5 per cent wiped off their valuation by Trump’s salvo.
Tariff threat on Europe ‘unthinkable’
Linsday James, investment strategist at Quilter, said the unexpected intervention has “put to bed” any illusions that Trump’s capricious tariff regime was being wound down.
“The fact that the EU will now face a considerably higher tariff rate than China [is] an almost unthinkable scenario just a matter of weeks ago,” she added.
“European markets will consequently suffer as a result, undoing some of the strong momentum we have seen in recent months. US businesses too will be unsure what the rules of engagement are too, meaning any planning simply becomes impossible to do.”
Elsewhere in the post, Trump said: “The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with.
“Their powerful Trade Barriers, Vat Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, unfair and unjustified lawsuits against Americans Companies, and more, have led to a Trade Deficit with the U.S. of more than $250,000,000 a year, a number which is totally unacceptable.”