FRANKFURT: European shares closed slightly lower on Thursday after US President Donald Trump threatened to impose tariffs on alcoholic products from the European Union, further aggravating a full-blown global trade war.
The pan-European STOXX 600 was 0.2% lower, after closing higher on Wednesday.
In his latest pronouncement, Trump said he would put a 200% wine tariff on all wines and other alcoholic products coming out of EU countries if the bloc did not remove its tariff on whiskey.
Spirit-makers Pernod Ricard and Campari fell 4% and 4.3% respectively, with the food and beverages sector lost 0.2%.
Hennessy cognac maker LVMH was off 1.1%.
“It’s becoming really hectic now because the tariffs are going on and off and no one knows how far this could go,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“One thing, whether they go live or whether they are negotiation tactics, is that they raise inflation expectations which is why markets are panicked right now.”
Automobiles and parts shed 1.7%, leading sectoral declines. Carmaker Stellantis and car-parts supplier Valeo fell 2.3% and 6.4% respectively.
Countering losses, telecommunications gained 1.4% while healthcare stocks were 0.5% higher, boosted by a 3.4% rise in Novo Nordisk. Kepler Cheuvreux raised the drugmaker’s rating to “buy” from “hold”.
Trump threatened on Wednesday to ratchet up a global trade war with further tariffs on European Union goods, just hours after retaliatory levies announced by the EU.
The chaos around the implementation of Trump’s trade duties has generated extreme volatility in global markets, with analysts worrying that tariff uncertainties could dent economic growth.
European truck makers declined sharply after the US Environmental Protection Agency’s (EPA) decision to start efforts to reverse the Joe Biden administration’s vehicle emissions rules.
Daimler Truck lost 4.4% and was set for its worst day on record, while Volvo shed 2.2% and Traton lost 2.6%.
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