European markets are heading for a negative open on Tuesday as U.S. President Donald Trump’s 25% import tariffs on Mexican and Canadian goods, and additional tariffs on China, are expected to go into effect later in the day.
The U.K.’s FTSE 100 index is expected to open 42 points lower at 8,833, Germany’s DAX down 155 points at 22,982, France’s CAC 48 points lower at 8,165 and Italy’s FTSE MIB 346 points lower at 38,789, according to data from IG.
The prospect of tariffs has rattled investors amid concerns that they will reignite inflation in the U.S. and escalate a global trade war.
On Monday, all three major U.S. indexes dropped into negative territory after Trump confirmed in the afternoon that the U.S.′ 25% duties on Canada and Mexico would go into effect the following day and that that there was “no room left” for the two nations to negotiate these new import tariffs. Trump also slapped an additional 10% tariff on Chinese goods.
In retaliation, China announced overnight that it would impose additional tariffs of up to 15% on some U.S. goods and restrict exports to 15 U.S. companies.
European markets traded higher on Monday, amid a charge in defense shares after regional leaders held security talks that touched on bolstered military spending. Elsewhere, euro zone inflation data encouraged expectations that the European Central Bank will cut interest rates when it meets on Thursday.
Euro zone inflation dipped to 2.4% in February, slightly above analyst expectations. Meanwhile, the euro zone purchasing managers’ index showed that a contraction in the bloc’s manufacturing sector had eased to its least severe level in two years.
On Tuesday, earnings are set to come from Continental, Thales and IWG, and data releases include the latest European unemployment figures.
