European markets sink as trade war escalates

European equity futures tumbled Monday, reacting to Trump’s aggressive tariff move on Canada, Mexico, and China. With retaliation already in motion, fears of an all-out global trade war have intensified, sending stocks, commodities, and risk assets lower across the board. Tariffs Hit, Retaliation Begins The Trump administration imposed 25% tariffs on Mexican and most Canadian imports, alongside a 10% levy on Chinese goods, citing national security concerns and the fight against fentanyl trafficking. Canada responded immediately, slapping 25% tariffs on $155 billion worth of US goods, while Mexico confirmed it would retaliate with its own trade restrictions. Trump also signaled that tariffs on the European Union are “definitely happening”, though he stopped short of providing a timeline. Markets, however, are already pricing in the risk. Market Impact: Stocks Drop, Automakers Under Pressure The Euro STOXX 50 futures fell 2.3%, while FTSE, DAX, and CAC futures declined between 1.2% and 2.1%. Meanwhile, Wall Street futures are down nearly 1.9%, mirroring a 2.4% decline in Asian equities overnight. Automakers are among the worst hit, with Volkswagen, Porsche, Daimler Truck, Mercedes-Benz, and BMW falling 1.9%-4.5% as supply chain disruptions loom. Many manufacturers rely on North American production hubs, and Trump’s tariffs could significantly increase costs. What’s Next? EU Braces for Impact While the EU has not yet been hit with tariffs, markets see Trump’s latest move as a warning sign. If the White House follows through with new levies, European exports and manufacturing giants could face severe consequences. With uncertainty rising and retaliation escalating, markets remain on edge, bracing for the next chapter in Trump’s trade war saga.