European shares hit a 16-month low as investors reacted to fears of a recession following the United States tariff announcements.
Despite China’s retaliation, U.S. President, Donald Trump, remained firm on his tariff plans, leading investors to expect interest rate cuts from both the European Central Bank and the Federal Reserve.
The pan-European STOXX 600 dropped 5.8% early Monday, following its largest one-day percentage decline since the COVID-19 pandemic on Friday.
Germany’s trade-sensitive benchmark index plunged 6.6%, with Commerzbank and Deutsche Bank falling 10.7% and 10%, respectively.
Meanwhile, arms manufacturers, which had risen earlier in the year due to expectations of increased defense spending, also saw significant losses on Monday.
Tankmaker Rheinmetall saw the steepest decline on the STOXX 600, dropping 23.7%, while Hensoldt, Rheinmetall, and Renk experienced falls between 17% and 21%.
Trump told reporters over the weekend that investors would have to “take their medicine” and emphasized he wouldn’t strike a deal with China until the U.S. trade deficit was addressed.
Speaking on Air Force One on Sunday, President Trump stated that foreign governments would need to pay “a lot of money” to have his tariffs lifted.
“I spoke to a lot of leaders, European, Asian, from all over the world,” Mr Trump told reporters.
“They’re dying to make a deal. And I said, we’re not going to have deficits with your country.
“We’re not going to do that because to me, a deficit is a loss. We’re going to have surpluses or, at worst, going to be breaking even.”
His comments triggered a fresh wave of selling in Asian markets, intensifying market anxiety.
