Finance
European shares stumble on Trump's new tariff threat
Published by Global Banking & Finance Review®
Posted on June 2, 2025
3 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 2, 2025
3 min readLast updated: January 23, 2026
European shares fell as Trump's tariff plans sparked trade tensions. STOXX 600 slipped, with the auto sector hit hardest. ECB rate decision awaited.
By Purvi Agarwal and Ragini Mathur
(Reuters) -European shares began June on a dour note as markets grappled with U.S. President Donald Trump's new tariff plans that threatened to reignite a fresh wave of global trade tensions.
The continent-wide STOXX 600 slipped 0.1% on Monday, after recording about a 4% gain in May.
Late on Friday, Trump said he planned to increase tariffs on imported steel and aluminium to 50% from 25%, to which the European Union said it was prepared to retaliate.
Steel companies as ArcelorMittal and Aperam pared some losses and closed marginally lower.
The automobile sector, however, bore the brunt of the trade jitters, falling 2.1%, the most among sectors.
Milan-listed Stellantis down 5%. Mercedes-Benz, BMW and Volkswagen fell between 1.9% and 2.7%.
Even Luxury stocks, reliant on global exports dropped, with the broader gauge was down 0.8%.
An index measuring volatility in the market climbed 4.3% - at a one-week high.
"The market was definitely in what we would call risk off mode," said Steve Sosnick, chief market analyst at Interactive Brokers.
"But each piece of rhetoric is having less of an effect than the prior ones because markets have mostly learned to shrug it off. Yet it cannot be shrugged off entirely."
Data-wise, European manufacturing moved closer to stabilization in May, according to HCOB Eurozone PMI data.
However, Europe's largest economy, Germany, remained the weakest performer among the big euro zone members with a PMI of 48.3.
Germany's DAX closed 0.3% lower.
Oil stocks outperformed, with the sector jumping 1.4%, as crude prices surged after OPEC+ announced a smaller-than-feared production increase for July. [O/R]
Some of the UK's defence manufacturers gained after the news that Britain will expand its nuclear-powered attack submarine fleet.
Babcock International Group and QinetiQ Group advanced 8.2% and 4.5% respectively.
In Poland, stocks were flat. Opposition candidate Karol Nawrocki narrowly won the presidential election, dealing a significant blow to the centrist government's pro-European agenda.
Media stocks such as France's Publicis Groupe and WPP fell 3.8% and 2.8% respectively. The Wall Street Journal reported that Meta Platforms aimed to fully automate ad creation with AI by the end of next year.
Among other stocks, Sanofi agreed to buy U.S.-based Blueprint Medicines Corporation, paying $129 per share, representing an equity value of approximately $9.1 billion.
Shares in the French pharma group fell 1.8%.
This week, all eyes will be on the European Central Bank's interest rates on Thursday, with money market traders are almost fully pricing in a quarter-point cut.
Insights from ECB President Christine Lagarde are due at 1730 GMT.
(Reporting by Purvi Agarwal, Sanchayaita Roy, Ragini Mathur and Pranav Kashyap in Bengaluru; Editing by Mrigank Dhaniwala and David Evans)
Trump announced plans to increase tariffs on imported steel and aluminium to 50% from 25%, prompting a potential retaliation from the European Union.
European shares began June with a decline, as the continent-wide STOXX 600 slipped 0.1% after a 4% gain in May.
The automobile sector was hit hardest, falling 2.1%, with companies like Stellantis and Mercedes-Benz experiencing significant losses.
The HCOB Eurozone PMI data indicated that European manufacturing moved closer to stabilization in May, although Germany's PMI remained weak at 48.3.
All eyes will be on the European Central Bank's interest rate decision on Thursday, with traders almost fully pricing in a quarter-point cut.
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