European equity markets nosedived on Tuesday amid investor alarm over U.S. President Donald Trump’s punitive trade duties aimed at major allies. Mounting tariff fears crushed sentiment from the opening, prolonging Monday’s heavy losses across continental bourses.
The pan-European Stoxx 600 shed 0.7% post-open, as all sectors and key exchanges from London to Frankfurt turned red. This built on the index’s prior 1.3% retreat, darkening the outlook before Davos and earnings season.
Trump’s weekend pledge targets eight nations—Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland—with tariffs rising from 10% on 1 February to 25% by 1 June, absent a Greenland purchase deal for Washington. Leaders hit back against the tariffs and deemed them “unacceptable,” with France pushing the EU’s “Anti-Coercion Instrument” in retaliation.
Tuesday brought a 200% levy threat on French wine and champagne after reports that Emmanuel Macron was unwilling to join Trump’s “Board of Peace” on Gaza. LVMH, owner of Moët & Chandon, Dom Pérignon, and Veuve Clicquot, fell 1.7% in Paris. Remy Cointreau, maker of Telmont champagne, dropped 2%.
Focus shifts to Davos, where Ursula von der Leyen, He Lifeng, and Macron speak today, ahead of Trump’s Wednesday address. Analysts predict a 10% tariff round could cut EU earnings by 2-3 points, slamming autos and shipping while buoying gold.