LONDON — European stocks sold off on Tuesday as the specter of fresh trade tariffs lingers, hurting market sentiment.
The pan-European Stoxx 600 had fallen 1.2% by 1:41 p.m. in London (8:40 a.m. ET), with all sectors and major regional bourses in negative territory.
The market slump comes after Trump announced on Saturday that eight European allies would face increasing tariffs, starting at 10% on Feb. 1 and rising to 25% on June 1, if a deal is not reached that allows Washington to “buy” Greenland, a semi-autonomous territory that’s part of Denmark.
The proposed tariffs would target Denmark, Norway, Sweden, France, Germany, the U.K., the Netherlands, and Finland, Trump said. European leaders have hit back against the tariffs and have called for more dialogue with the U.S.
European leaders have described Trump’s fresh tariff threats as “unacceptable,” and are reportedly considering countermeasures — with France said to be pushing for the European Union to use its strongest economic counter-threat, known as the “Anti-Coercion Instrument.”
Shares listed in export-driven Germany slumped following the threats from the White House, with the county’s DAX index falling by 1.4% and the MDAX — an index comprised of German mid-cap stocks — losing 2.1%.
On Tuesday, Trump also threatened to slap 200% tariffs on French wine and champagne after France’s President Emmanuel Macron was reported to be unwilling to join his “Board of Peace” on Gaza.
Paris-listed shares of luxury giant LVMH — which owns Moët & Chandon, Dom Pérignon and Veuve Clicquot — were 2.2% lower, while French drinks giant Remy Cointreau — maker of Telmont champagne — lost 2%.
France’s CAC 40 index was last seen trading around 1.1% lower. Speaking at the World Economic Forum in Davos, Switzerland, on Tuesday, Macron hit out at “bullies.”
“We do prefer respect to bullies … we do prefer rule of law to brutality,” he said. “Europe has very strong tools now, and we have to use them when we are not respected and when the rules of the game are not respected. The anti-corruption mechanism is a powerful instrument, and we should not hesitate to deploy it in today’s tough environment.”
The euro was last up 0.8% against the dollar, trading at $1.174, while the single currency also rose 0.6% against the British pound, at 0.87 euros.
Sterling, meanwhile, gained 0.2% against the greenback, trading at $1.345.
It comes as U.K. jobs data published by the Office for National Statistics showed the country’s unemployment rate remained unchanged at 5.1% in the three months to the end of November, while wage growth eased to 4.5%.