China's tariff strike triggers European market turmoil
The Chinese authorities have countered the American tariffs by deciding to increase the rates on imports from the USA from 34% to 84%. In response, sell-offs have intensified on European trading floors. Investors are likely worried about the escalating trade conflict between the world's largest economies.
On Wednesday afternoon, the second wave of sell-offs swept across Europe. In the afternoon, China responded to the United States by imposing its own retaliatory tariffs - at 84%. This information did not improve investor sentiment.
The German DAX saw even deeper losses, dropping 4.04% to 19,437 points. The index of Germany's leading companies was under strong selling pressure. Companies in the aviation and automotive sectors performed the worst – MTU Aero Engines fell by 6.49%, and real estate giant Vonovia lost 6.01%. Fresenius SE (-5.95%) and semiconductor manufacturer Infineon (-5.90%) also saw significant declines. These major losses reflect investors' concerns over the growing threat to German exports amidst escalating trade wars.
The French market also in deep red
The Paris CAC40 dropped by 4.18% to 6,804 points. Pharmaceutical and aviation companies suffered the biggest losses – Sanofi fell by 7.18%, and Safran declined by 7.14%. Unibail-Rodamco, a European commercial real estate giant, lost 6.64%, while Airbus declined by 5.86%. The luxury conglomerate Kering, owner of brands such as Gucci and Balenciaga, dropped by 5.17%.
The Spanish IBEX 35 ended the session with a 3.52% decline to 11,642 points. Pharmaceutical company Grifols recorded the deepest losses, with its shares dropping 7.65%. Significant losses were also suffered by Fluidra (-7.03%) and telecommunications operator Cellnex Telecom (-6.39%). The travel company IAG, owner of British Airways and Iberia, lost 5.30% of its value.
Investors responded to the United States' decision to impose unprecedented tariffs of 104% on China. This move sparked reactions from investors first in Asia, then in Germany, and France.
Chinese retaliation deepens global unrest
Today's sell-off on European exchanges is a direct reaction to China's answer to the tariff policy of U.S. President Donald Trump. The Chinese State Council Tariff Commission Office announced that from 10th April, tariffs on US goods would rise to 84% as a response to the US's imposition of 104% tariffs on Chinese products.
"The U.S. threat to escalate tariffs against China is adding insult to injury, further exposing the U.S. nature of extortion," the Chinese Ministry of Finance stated in an official release.
This is another chapter in the escalating trade conflict. Recall that President Trump announced "retaliatory tariffs" globally last week: 10% on all imports and 25% on foreign cars. Additionally, special rates were introduced for countries with a large trade deficit with the US – in the case of the European Union, it's 20%.
