The European stock market opened with sharp cuts on Monday, January 19, as investors pressed the sell button amid threats of fresh tariff-related tensions between the US and several European nations, following the opposition to Donald Trump's Greenland ambitions.
The pan-European STOXX 600 tumbled almost 1.3%. France's CAC 40 index, Germany's DAX and London's blue-chip FTSE 100 dropped 1.8%, 1.4% and 0.4%, respectively, as per a Reuters report.
Luxury fashion retailer Louis Vuitton was among the top losers in the STOXX 600 index as it shed over 4%. Carmakers like BMW, Mercedes-Benz, Porsche and Volkswagen also fell 3-4% each.
Trump's Greenland tariff threat
US President Donald Trump threatened to impose fresh tariffs on several European nations over their opposition to allow United States to buy Greenland.
Trump said he would impose an additional 10% tariff starting February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain. This will rise to 25% on June 1 if no deal is reached, he said, casting a doubt on deals reached earlier and raising trade tensions.
"Tariff threats undermine transatlantic relations and risk a dangerous downward spiral," the eight countries warned in a joint statement on Sunday.
Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said that it will be volatile days ahead in the near-term for stock markets globally, with big geopolitical and geoeconomic developments impacting markets.
"We don’t know now how President Trump’s disruptive policies are going to impact international trade and global economic growth. How the European nations are going to react to President Trump’s latest Greenland tariffs remains to be seen."
He cautioned that if Trump walks his talk and imposes 10% tariffs on the eight European countries on February 1st and follows it up by raising the tariffs to 25% from June 1st onwards, retaliation by the European bloc is almost certain. In such a scenario, a trade war will breakout impacting global trade and growth, the veteran market analyst warned.
The likely impact of such a development on the market will be negative, he said, adding that it is also likely that Trump chickens out, as has happened in the past.
"The rationale for higher tariffs is now even more political and less economic than in the first half of 2025," Reuters quoted ING economists as saying.
(With inputs from agencies)
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