EU Morning Session: Negative start for European indices following new US tariffs

European markets opened sharply lower on Monday after U.S. President Donald Trump imposed trade tariffs on several countries and threatened to do the same with the European Union and the United Kingdom.

The markets in the region reacted negatively to Trump’s weekend decision to impose 25% tariffs on imports from Mexico and Canada, as well as 10% tariffs on goods from China. The tariffs are expected to take effect on Tuesday. The U.S. conducts trade worth about $1.6 trillion with these three countries. Canada responded with counter-sanctions on U.S. imports, and Mexico threatened to take similar measures.

When asked on Sunday about the prospect of imposing tariffs on goods from the UK and the EU, Trump told the BBC that both countries are “out of line,” but the EU is in a worse position. He said that an agreement could be reached with the UK, with which the U.S. has more balanced trade relations, but firmly stated that tariffs on the EU “will definitely happen” and will be imposed “very soon.”

Trump described the U.S. trade deficit with the EU as a “monstrosity,” reiterating previous statements that the bloc has “really taken advantage” of the United States. An EU spokesperson said that the bloc would “respond firmly” to any new U.S. tariffs on its goods. Markets in the Asia-Pacific region traded lower overnight following Trump’s tariff decision, while U.S. stock futures fell from Sunday evening as investors assessed the new U.S. tariffs and their potential impact on the economy and corporate profits.

The euro fell after Trump’s tariff threat, depreciating by 1.20% against the dollar at 10:25 EET, trading at 1.0235. President Donald Trump told the BBC over the weekend that U.S. tariffs on EU goods “will definitely happen.” An EU Commission spokesperson said the EU would “respond firmly.