(Bloomberg) — European stock futures tumbled as investors weighed up the odds that the region will be next to suffer from US tariffs.
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Contracts on the Euro Stoxx 50 Index fell as much as 3.4% in early Asia trading, an even worse performance than the widespread decline of US stock futures. The selloff came after US President Donald Trump imposed tariffs on Canada, Mexico and China, and promised to make similar moves against the European Union, in what looks likely to be first salvo in an escalation of trade restrictions.
Trump said on Monday he will “definitely” place new tariffs on the European Union, reiterating complaints about the US trade deficit with the bloc and what he sees as insufficient EU imports of American cars and agricultural products.
He told reporters last week that the US will be seeking “something very substantial” from the EU. Trump has so far not specified a level or time frame for the move, and the EU has said it will “respond firmly” if the US imposes tariffs.
READ: As Trump Tariffs Near, World Braces for Stock Market Spillover
The pan-European Stoxx 600 index had a strong January, rallying to a record high amid solid earnings and hopes that the region would be spared from immediate US levies. But investors are increasingly being forced to confront the risk that tariffs from the US are a near-term threat to corporate profits.
Tariffs of 10% on European goods would shave between 1% and 2% off earnings per share, according to estimates from Citigroup Inc. strategists. Trump has said he plans to impose more tariffs on a wide range of imports, including oil, metals, pharmaceuticals, and chips, in the coming months.
The shares of automakers like Stellantis NV, Volkswagen AG and alcoholic drinks companies such as Diageo Plc and Pernod Ricard SA will be in focus when cash trading starts later on Monday. Sectors like energy and miners could also be active.
Read: Dollar and Oil Surge, Stocks Fall on Trump Tariffs: Markets Wrap
(Updates with more context on US tariff plans)
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