Global Trade Tensions Spark European Market Slump

European shares saw a significant downturn following the imposition of U.S. tariffs on Canada, Mexico, and China. Concerns were raised about potential tariffs on Europe, leading to declines in key sectors, including automakers and luxury goods. The volatility was driven by escalating trade tensions.

European shares tumbled on Tuesday, aligning with a global selloff, in reaction to the United States imposing tariffs on Canada, Mexico, and China. This move sparked fears that similar tariffs could soon target the European market.

By 0811 GMT, the pan-European STOXX 600 index had decreased by 1%, stepping back from its recent record highs. The market's downturn was fueled by U.S. President Donald Trump's recent proposal of a 25% tariff on European Union cars and goods.

Automaker stocks, particularly susceptible to trade duties, were hit hard. Stellantis fell 3.6%, BMW decreased by 3%, and Porsche was down 1.6%, with the automobiles and components sub-index losing 2.6%. Meanwhile, Chinese luxury stocks like Kering, LVMH, and Hermes saw declines amid increased duties. Elsewhere, the oil and gas index suffered a 2.8% drop alongside falling crude prices, while the aerospace and defense index experienced a slight rise due to potential shifts in European defense spending.

(With inputs from agencies.)