FRANKFURT: European shares retreated from record highs on Tuesday, joining a global sell-off after US tariffs on Canada, Mexico and China took effect, as investors worried about the hit to global growth and whether similar levies could be imposed on Europe.
The pan-European STOXX 600 index closed 2.1% lower, and logged its worst day since August 2024.
All regional bourses closed the day in the red, with the German benchmark falling 3.5% from record highs hit on Monday.
The threatened duties came into effect early on Tuesday, hitting hopes that they would be further delayed for more negotiations.
Automakers were the worst hit, with Stellantis dropping 10.2%, BMW losing 5.9% and Ferrari down 4.4%.
The automobiles and parts sector fell 5.4%, its biggest single day fall since March 2022.
“Until a few days ago, there was still hope that Trump was threatening tariffs, but wouldn’t put them through. Now it’s clear that he is and global equity markets are a bit shocked by that,” said Joris Franssen, head of the dividend and value team at Van Lanschot Kempen.
“Automobile makers have part of their supply chain and manufacturing outside of the US, which will hurt these businesses… the big question is if they are able to price these tariffs through to the end consumer.”
Financial services and banks fell 3.7% and 3.8% respectively, while falling oil prices dragged energy stocks 4.2% lower.
Investors were concerned about the European Union being the next target, as Trump floated a 25% duty on cars and other imports from the EU last week.
The Euro STOXX volatility index surged to a high of 22.90 points in the day, its highest since August 2024.
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