By Sanchayaita Roy and Sukriti Gupta
(Reuters) -European shares fell on Monday, led by automobiles, as U.S. President Donald Trump’s latest threat to impose steep tariffs on the European Union and Mexico kept investors on edge.
The pan-European STOXX 600 index was down 0.5% at 544.74 points, as of 0830 GMT. Other regional indexes also declined, barring the UK’s FTSE 100, which was up 0.2%.
On Saturday, President Trump threatened to impose a 30% tariff on imports from the European Union and Mexico, effective August 1, after weeks of negotiations with major U.S. trading partners failed to yield comprehensive trade agreements.
“The market is definitely taking the news negatively, but it’s not pricing it in…they are taking this with a pinch of salt and assuming that it’s just the start of a conversation and that over the next few weeks the news flow will gradually improve”, said Michael Field, chief equity market strategist EMEA at Morningstar.
In response, the EU said on Sunday it would extend its suspension of countermeasures to U.S. tariffs until early August and continue to press for a negotiated settlement.
Italy’s Foreign Minister, Antonio Tajani, said in a newspaper interview that the EU has already prepared a list of tariffs, worth more than 21 billion euros ($24.5 billion), on U.S. goods if the two sides fail to reach a deal.
The EU trade commissioner Maros Sefcovic said that the EU will seek a favorable trade agreement with the U.S., while preparing possible countermeasures should negotiations break down.
According to Field the EU is taking the right approach by being cooperative yet firm at the moment, noting “they’re still playing hardball a little bit in saying that if push comes to shove down the line, we still have a plan.”
In the market, European automobile sector declined by 1.5% following Trump’s new tariff threats, with no indication of special treatment for autos, which remain subject to a 27.5% duty.
Carmarkers such as Porsche dropped 2.4%, while BMW and Mercedes-Benz each fell 2%. Volkswagen declined by 1.9%
Among individual stocks, Lifco slumped 9.1% after the company missed second-quarter pre-tax profit.
Conversely, AstraZeneca rose 1.8% after the drugmaker said its drug Baxdrostat met all the main and secondary goals of a late-stage study in patients with uncontrolled or treatment-resistant hypertension.
Meanwhile, Morgan Stanley downgraded their 2025 MSCI Europe local currency earnings per share growth forecast to -1.0% from +1.3% due to currency and tariff uncertainties.
(Reporting by Sanchayaita Roy and Sukriti Gupta in Bengaluru; Editing by Mrigank Dhaniwala and Tasim Zahid)
