European stocks close 2.7% lower as key sectors are upended after Trump tariffs

European markets closed lower on Thursday as investors monitored the global reaction to U.S. President Donald Trump's stronger-than-expected trade tariff rollout.

The regional Stoxx 600 provisionally closed 2.7% lower. Germany's DAX shed 3%, France's CAC 40 was down 3.3% and the U.K.'s FTSE 100 was lower by 1.6%.

— Sawdah Bhaimiya

Global markets, businesses and long-standing geopolitical relationships were thrown into disarray on Thursday, the day after U.S. President Donald Trump's tariff policy — and Europe was not spared from the chaos.

The European Union has been hit with 20% duties, while the U.K. was hit with a lower 10%, benefiting from its more balanced U.S. trade relationship. All eyes will now be on how far policymakers will go in their response, and how deeply the conflict can escalate.

Most analysts agree that, from an economic perspective, there are few — or perhaps no — economic winners from the expected slowdown in growth and the fracturing of trade ties.

Some bright spots nevertheless emerged among European assets on Thursday — as well as some deeply negative ones.

Read the full story here.

— Chloe Taylor, Jenni Reid, Sam Meredith

U.S. President Donald Trump will "buckle under pressure" and alter his tariff policies if Europe bands together, acting German economy minister Robert Habeck said Thursday.

"That is what I see, that Donald Trump will buckle under pressure, that he corrects his announcements under pressure, but the logical consequence is that he then also needs to feel the pressure," he said during a press conference, according to a CNBC translation.

"And this pressure now needs to be unfolded, from Germany, from Europe in the alliance with other countries, and then we will see who is the stronger one in this arm wrestle," Habeck said.

Allowing Trump to persist or trying to appease him would not be a successful strategy under any circumstances, he added, noting that the response should be a "day of determination."

Read the full story here.

— Sophie Kiderlin

U.S. Stocks nosedived shortly after the opening bell on Thursday, as investors contend with blowback from President Donald Trump's tariff announcement.

The S&P 500 slipped more than 3%, while the Nasdaq Composite lost 5%. The Dow Jones Industrial Average fell 1,200 points, or 3%.

— Brian Evans

Eight key OPEC+ producers on Thuesday agreed to raise combined crude oil output by 411,000 barrels per day, speeding up the pace of their scheduled hikes and pushing down oil prices.

The Ice Brent contract with June delivery was trading at $70.50 per barrel at 1:32 p.m. London time (8:32 a.m. ET), down 5.94% from the Wednesday close. The front-month May Nymex WTI contract was at $67.11 per barrel, 6.41% lower.

Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman met virtually to review global market conditions and decided to raise collective output by 411,000 barrels per day, starting in May. The group was widely expected to implement an increase of just under 140,000 barrels per day next month.

The May hike agreed on Thursday is "equivalent to three monthly increments," OPEC said in a statement, adding that "the gradual increases may be paused or reversed subject to evolving market conditions.

Read the full story here.

— Ruxandra Lordache

Pharmaceutical companies breathed a sigh of relief Wednesday after U.S. President Donald Trump revealed that they would not be subject to reciprocal tariffs — but that reprieve could prove fleeting as the White House moves ahead with plans for the sector.

The Trump administration is considering launching a so-called 232 investigation into pharmaceuticals, among other industries, which could lead to import duties under the Trade Expansion Act, Bloomberg cited a senior administration official as saying on Wednesday.

The White House did not immediately respond to CNBC's request for confirmation.

"The pharmaceutical companies are going to come roaring back, they are coming roaring back, they are all coming back to our country because if they don't they got a big tax to pay. And if they do, I'll be very happy," Trump said during his "Liberation Day" tariff announcement.

Read the full story here.

— Karen Gilchrist

Europe's Stoxx Luxury 10 index was 4% lower at 11:12 a.m. in London.

Danish jeweler Pandora was 11.8% lower, Swiss watchmaker Swatch Group shed 5.6% and Italian fashion brand Brunello Cucinelli was down 4.8%. Luxury conglomerate LVMH stock was 3.9% lower, while Gucci owner Kering lost 3.5%. Prada's Frankfurt-listed shares were 6.8% lower.

— Chloe Taylor

Danish shipping and logistics giant Maersk on Thursday said that the tariff plan announced by the White House would lead to more caution among its customers in a more fragile economic environment.

"In its current form, [tariffs] clearly isn't good news for global economy, stability and trade," the company said in a statement, adding that it was too early to determine exactly how the situation would unfold and how countries around the world would react.

"Before the announcements, we have seen customers accelerate imports to the US and secure additional storage space. Moving forward, until they have a clearer picture, we generally expect customers to be a bit more cautious about their inventory levels."

"In the very short term, we're likely to see some rush airfreight orders in the US ahead of the announced tariffs going into effect. It is also likely we will see an increase in demand for bonded storage as customers will want to hold off clearing goods while they get more certainty," Maersk said.

Shares of shipping and logistics firms were broadly lower on Thursday, with Maersk down 7.5%, Hapag-Lloyd falling 8.37%, and DSV shedding 5.5%.

— Jenni Reid

The European continent "should not undergo any positive or negative influence by the president of another country," Leonardo CEO Roberto Cingolani told CNBC's Silvia Amaro on Wednesday — before U.S. President Donald Trump announced a huge raft of so-called reciprocal tariffs.

Though he said he found it "historically and socially strange," Cingolani, who has headed up the Italian defense company since 2023, said the right thing to do is to take a wait-and-see approach.

"Never evaluate a complex situation in the first instant," he said. "It's like evaluating the situation after the bomb explodes — you have to see what happens later. So, give it a bit more time to see, maybe six months."

Cingolani also said he could not see an advantage in an economic fight between the U.S. and the European Union.

"Come on, we are the Western society. Is it possible that we are fighting among each other for extra pricing on a car?" he said. "I think the competitors are outside, right? Let's take a bit of time … let's finish the earthquake and see what happens next. I'm sure we will be all mature enough to fix things properly. If not, it will be a big problem for our children."

— Chloe Taylor

Sales of French wine and spirits to the U.S. are expected to fall at least 20% in the U.S. as a result of new tariffs, Gabriel Picard, chairman of industry group FEVS, told France's BFM TV on Wednesday, according to Reuters.

FEVS said in a statement that it deeply regrets the U.S. decision, which it said "penalizes both French wine and spirits exporters and their American partners—importers, wholesalers, and retailers—and, above all, American consumers themselves."

It said French exports are expected to decline by approximately 800 million euros ($880.5 million), and 1.6 billion euros for the 27 countries in the European Union.

"Such a decline will have a huge impact on employment and the sector's economy," the group representing exporters said.

French President Emmanuel Macron is due to convene representatives of affected business sectors at the Elysee Palace on Thursday.

— Jenni Reid

The White House on Wednesday listed tariff rates for 180 countries that, in most cases, were roughly half of what the Trump administration claims each country has "charged" the U.S.

It didn't take long for market observers to try and reverse engineer the formula — to confusing results.

Many observers said the U.S. appeared to have divided the trade deficit by imports from a given country to arrive at tariff rates for individual countries.

Such methodology does not necessarily align with the conventional approach to calculate tariffs and would imply the U.S. would have only looked at the trade deficit in goods and ignored trade in services.

The U.S. also appeared to have applied a 10% levy for regions where it is running a trade surplus.

The Office of the U.S. Trade Representative has since laid out its approach, including a formula, on its website that appeared somewhat similar to the online chatter, barring a few differences.

Read the full story here.

— Neelabh Chaturvedi, Asriel Chua

Europe's Stoxx 600 index was 1.6% lower shortly after the market open early on Thursday, as traders assessed the scope and impact of U.S. tariffs.

Banks on the index were down 3.2% at 8:10 a.m. U.K. time, while technology stocks fell 2.6%.

A range of European companies expected to be hit by the measures declined sharply, with German retailers Puma and Adidas down 9% and 8.6%, respectively. Swedish automaker Volvo Cars was down 9%, and shipping giant Maersk — viewed as a barometer for global trade — shed 7.4%.

— Jenni Reid

U.K. Business Secretary Jonathan Reynolds said the country faces a "threat" to its open economy from any global fallout from Trump's new tariffs regime, which included a baseline 10% "reciprocal" tariff on British goods exported to the States.

The U.K. has escaped relatively unscathed compared to many other nations, facing the lowest trade tariff that President Trump announced Wednesday thanks to its largely balanced trade in goods with the States.

Trade deficits that the U.S. runs with many trading partners were used in large part by the White House to calculate which level of tariff should be imposed on specific countries or territories.

Recognizing the U.K. was in a better position than many countries, Reynolds nonetheless said Britain was vulnerable to turmoil in other parts of the world hit with higher tariffs, such as the EU which will see a 20% levy on its goods exports to the U.S.

"Anything that disrupts the global trading system is a threat to the U.K. because we are a much more globally orientated trading economy than some partners," Jonathan Reynolds told Times Radio on Thursday, according to Reuters

He said the government would continue work to strike a trade deal with the Trump administration and would hope to get tariffs reversed. He didn't rule out counter-measures "if we need to."

— Holly Ellyatt

The euro was 1.11% higher against the U.S. dollar at 7:43 a.m. at $1.0975, its highest level since Oct. 9.

Sterling climbed 0.75% against the greenback, while the U.S. dollar index, a measurement against a basket of major currencies, fell 1.2%.

— Jenni Reid

U.S. tariff policies announced Wednesday would see U.S. gross domestic product take a 10% hit in the second quarter of 2025, High Frequency Economics Chief Economist Carl Weinberg said in a note Thursday, potentially pushing the world's largest economy into a recession after a predicted small contraction in the first quarter.

Weinberg estimated that tariffs would take $741 billion out of U.S. household real incomes or corporate profits, or more if fully accounting for all tariffs on aluminum, steel and non-exempt trade with Canada and Mexico. His calculation of an average tariff rate on two-dozen countries of at least 30% is greater than expected, he said.

The U.S. economy will also be hit by price rises, Weinberg added, with the rate of an imported item such as softwood lumber higher by up to 25% — even if some of the inflationary impact is cushioned by downward pressure on the economy.

"Once a company fails, it will not spring back to life even if tariffs are reversed. If profits are hit — they are sure to be — then will stock prices crack? Will there be collateral damage as the economy adjusts to this new tariff regime? We are concerned."

— Jenni Reid

Europe's "worst economic nightmare just came true," economists at ING said in a note late Wednesday regarding news on 20% U.S. tariffs.

"While in recent weeks, the longer-term outlook for Europe had clearly brightened with the European defence initiatives and the German fiscal U-turn, tariffs have just darkened the near-term outlook."

The EU's willingness to negotiate is admirable but may be a lengthy process and does not appear to have much receptivity stateside, the ING economists said, potentially making an offer to buy more U.S. goods a quicker option for a deal.

EU countermeasures will include reinstating suspended tariffs on U.S. goods and adding higher counter-tariffs to a range of products including agriculture and food, clothing, furniture, household appliances, construction, steel, cars and car parts and precious metals, they added.

Overall, ING estimates 20% blanket tariffs could cut 0.3 percentage points from euro zone economic growth over the next two years, accounting only for direct and indirect trade impact.

Berenberg economists Atakan Bakiskan and Salomon Fiedler said the euro zone impact was "serious" but "could have been worse."

"We expect the damage of the escalating trade conflict to primarily show up in lower real GDP, while the net effect on inflation will probably be small," they said in a Wednesday note, also raising the positive effect of German stimulus. Goods exports to the U.S. accounted for 3.2% of euro zone gross domestic product in 2024, they said.

The economists said they expected "serious negotiations" between the EU and U.S. to begin soon, with the EU potentially able to leverage its status as a major market for U.S. services and tech companies.

— Jenni Reid

President Donald Trump and the White House laid out the U.S. reciprocal tariff rates that more than 180 countries and territories will face under his sweeping new trade policy.

In charts posted on social media, the White House shows the effective tariff rates they claim other countries impose on American goods, including by "currency manipulation and trade barriers."

An adjacent column shows the new tariff rates the U.S. will impose on each country or territory, including the European Union. The reciprocal rates are not necessarily the only U.S. tariffs these countries will face.

Trump held up the chart when he unveiled his tariff policy in the White House Rose Garden.

See the full list here.

— Kevin Breuninger

In addition to the sweeping country-by-country tariffs announced today, Trump also imposed a 10% baseline tariff that effectively ensures a tariff on any country that is not among the more than 180 singled out.

"All articles imported into the customs territory of the United States shall be, consistent with law, subject to an additional ad valorem rate of duty of 10%," unless otherwise noted, the executive order signed this afternoon reads.

Trump also reserves the right to raise this baseline rate "should U.S. manufacturing capacity and output continue to worsen."

Read the whole executive order here.

— Erin Doherty

Good morning from London, and welcome to CNBC's live blog covering all the action and business news in European financial markets on Thursday.

Futures data from IG suggests a generally positive open for European indexes, with London's FTSE 100 seen opening 0.15% higher, France's CAC 40 and Germany's DAX are seen opening around the flatline, and Italy's FTSE MIB slightly higher.

The pullback in sentiment among European bourses comes ahead of the latest indicator of the state of health of major regional economies, with gross domestic product readings from the U.K. and European Union on Thursday.

European markets had ended the day higher on Wednesday, with the pan-European Stoxx 600 index rising 0.55% after the S&P 500 and Nasdaq Composite rallied to new records yesterday. Investors are gearing up for more inflation data to assess the state of the U.S. economy.

The producer price index, due Thursday, will be significant factors in the direction interest rates take at the Federal Reserve's next meeting in September.

— Holly Ellyatt