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Finance

European shares drop as Trump's tariffs rattle markets

Published by Global Banking and Finance Review

Posted on February 3, 2025

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(Reuters) - European shares retreated on Monday, joining a global selloff amid fears that U.S. President Donald Trump's latest tariffs could escalate into a broader trade war.

Global financial markets came under pressure after Trump issued 25% trade duties on Canada and Mexico, along with a 10% levy on China over the weekend.

Trump also warned that tariffs on Europe will "definitely happen", but did not offer any clarity over his plans.

The pan-European STOXX 600 index was down 1.4% as of 0810 GMT. Futures for Wall Street's S&P 500 also fell 1.3%.

Automakers, which are vulnerable to trade duties, sank 3.5%. Porsche AG, BMW, Volkswagen, Mercedes-Benz and Stellantis fell in the range of 3.7% to 6.5%.

Technology also was among major losers, falling 2.5%. ASML Holding declined 2.8%, weighing heavily on the index.

All local bourses fell significantly, with Germany benchmark leading the losses with a nearly 2% drop. UK's benchmark FTSE 100 fell 1.1%, despite Trump indication that Britain may be able to avoid tariffs.

Euro zone bond yields fell, with Germany's rate-sensitive two-year yield down 6 basis points at 2.056%.

(Reporting by Nikhil Sharma; Editing by Varun H K)