European ,markets

European markets set for heavy falls after Trump’s EU tariff warnings

Stock markets across Europe are expected to experience significant losses following steep declines in Asia, triggered by U.S. President Donald Trump’s latest tariff announcements. The new tariffs, aimed at imports from the European Union, have reignited fears of a global trade war.

European Stocks Set for a Rough Start

Market analysts predict a volatile opening for European stock indices, with Britain’s FTSE 100, France’s Cac 40, and Germany’s Dax all poised for losses. Investors remain on edge as Trump hinted that tariffs on UK goods were not off the table but suggested that the situation “can be worked out.”

The market turmoil follows Trump’s weekend decision to impose stringent tariffs on imports from Mexico, Canada, and China. In response, these nations have vowed to retaliate, escalating tensions in global trade.





Asian Markets Take a Hit First

Since Asian markets were the first to open after the weekend’s tariff announcements, they provided an early glimpse into investor sentiment. Japan’s Nikkei suffered a steep 2.8% drop, while Hong Kong’s Hang Seng fell by 1%. Chinese markets remained closed for the Lunar New Year holiday but are expected to react upon reopening.

European pre-market indicators also point to sharp declines:

  • France’s Cac 40 – expected to drop over 2%
  • Germany’s Dax – likely to mirror the Cac’s steep fall
  • UK’s FTSE 100 – forecasted to decline by nearly 1%

Currency markets have also responded, with the pound slipping 1% against the U.S. dollar, trading just under $1.23. However, the British currency gained 0.4% against the euro, as the euro came under pressure from trade concerns.

Expert Warnings on Market Reactions

Kathleen Brooks, research director at XTB, cautioned that the stock markets “are likely to have a strong reaction” to Trump’s tariff escalation. She emphasized that European stocks will likely open sharply lower, with the most substantial losses affecting cyclical stocks and major exporters.

“The FTSE 100 may be somewhat shielded,” Brooks noted, citing hopes for a trade deal with the U.S. “Not only is the UK a defensive-style index, especially the FTSE 100, but it is not facing an immediate threat of tariffs; even so, the FTSE 100 is still pointing to a 0.8% decline at the start of this week.”

The Broader Economic Impact

While the UK may have a buffer, Brooks warns that the impact of these tariffs will extend beyond stock markets. “This does not mean that the UK economy will avoid impact from the tariffs, but it does mean that the UK economy could be more resilient than elsewhere,” she added.

She also highlighted the broader risks of Trump’s tariff measures: “It’s too early to know exactly what impact tariffs will have on the global economy, but it is fair to say that they have a high potential of triggering inflation, and weighing heavily on global growth, including the U.S. economy.”

A Volatile Week Ahead

With uncertainty looming, investors are bracing for a turbulent trading week. Global markets will be closely watching for further policy announcements from Washington, as well as responses from affected nations.

How do you think Trump’s tariffs will impact the global economy? Share your thoughts in the comments below.

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