European Stocks Plunge 3% Amid Trump’s Tariff Implementation, Market Uncertainty Rises

European stocks faced a steep decline on Wednesday, with the pan-European Stoxx 600 index dropping 3.08% by mid-morning in London. All sectors, including healthcare, mining, and oil & gas, saw significant losses. The French CAC 40, Germany’s DAX, and the UK’s FTSE 100 each reported notable drops of around 2.6% to 3.1%, as investors reacted to the implementation of U.S. President Donald Trump’s country-specific tariffs. This downturn came after a brief market recovery the previous day, which had ended a four-day losing streak.

The recent U.S. tariffs, which began taking effect just after midnight, targeted imports from various countries, including a hefty 104% tariff on Chinese goods. U.S. stocks also showed signs of pressure, with futures in decline as traders braced for further volatility. Trump’s announcements on additional tariff measures, including a potential “major tariff on pharmaceuticals,” further deepened market unease. Countries like Canada were already preparing retaliatory tariffs, particularly on U.S.-made vehicles, adding to the growing uncertainty in global trade relations.

The effects of the tariffs were particularly felt in sectors like luxury goods and mining, with Deutsche Bank downgrading the stock prices of major European companies like Kering, Burberry, and LVMH. The bank noted that while price hikes could offset some profit impacts, the broader economic uncertainty and weaker global stock markets would hinder recovery in luxury demand. Mining stocks were also downgraded, as analysts predicted the sharpest sector sell-off since 2020, with global growth nearing recession in the near term.

As equity markets tumbled, demand for safer assets like German government bonds surged, with yields on short-term bunds dropping. Meanwhile, European pharmaceutical giants voiced concerns about the risks posed by U.S. tariffs and regulatory shifts, warning that significant investments could shift away from Europe without swift policy reforms. The European Federation of Pharmaceutical Industries and Associations (EFPIA) highlighted the potential for a $55.9 billion capital expenditure exodus if the EU does not act to strengthen its pharmaceutical ecosystem and foster innovatio

Source: cnbc