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European Stock Markets Plunge Amid Trade War Fears Following US Tariffs
European stock markets continued their negative reaction to the imposition of tariffs by the United States, triggering concerns about escalating global trade tensions. Overnight, Asian markets experienced a sharp downturn, fueled by anxieties that retaliatory measures could precipitate a worldwide trade war. Investors are closely watching the developments as the potential for prolonged economic disruption looms.
Sharp Declines Across Major European Indices
As trading commenced this morning, European stocks extended their decline, reflecting investor apprehension and concerns among European leaders that these trade measures might become permanent. Major indices across Europe registered significant losses in early trading:
- Germany’s DAX: Fell 6.5% to 19,311.29
- France’s CAC 40: Decreased 5.7% to 6,861.27
- Britain’s FTSE 100: Lost 4.5% to 7,694.00
- Amsterdam Stock Exchange: Down 5.5%
- Sweden’s Market: Down approximately 7%
- Denmark’s Market: Also plummeted by around 7%
Defence and Banking Sectors Hit Hardest
Shares in defence companies and banks were among the most severely affected sectors. German defense manufacturer Rheinmetall, for example, saw its stock price plummet by nearly 24%.
Notably, earlier in the year, defence stocks had experienced gains following European leaders’ declarations of increased defence spending.
Banking institutions such as Barclays and Natwest also encountered substantial declines in early trading, with share prices falling by 7-8%.
Widespread Market Panic
The pervasive market unease was so intense that every company listed on the FTSE 100, representing the UK’s largest corporations, witnessed a decrease in their share price this morning. This broad downturn underscores the depth of investor anxiety.
Government Intervention and Trump’s Rationale
The UK government has stated its ongoing efforts to negotiate with the United States, seeking to postpone or eliminate the recently imposed 10% tariff, which is in addition to a 25% levy on vehicles imported into the US.
President Trump Defends Tariffs as “Medicine”
Speaking early this morning, US President Donald Trump characterized the tariffs as a necessary “medicine.”
He has previously articulated his intention to impose significant levies on countries perceived to have a trade surplus with the United States.
A trade surplus, in this context, refers to nations that export a greater value of goods to the United States than they import in American products.
President Trump stated, “I don’t want anything to go down. But sometimes you have to take medicine to fix something.”
He further commented, “I spoke to numerous global leaders from Europe and Asia, and across the world. They’re eager to make a deal.”
“We’re going to have surpluses or, at worst, going to be breaking even,” he concluded, suggesting a belief that these measures will ultimately benefit the US economically.