European markets closed lower on Thursday after US President Donald Trump threatened to impose 25% tariffs on imports from the European Union, reigniting fears of a trade war between the two economic blocs.
The Stoxx 600 index provisionally dropped 0.51%, trimming earlier losses, with the automotive sector leading the decline—falling 4%—amid mounting concerns over global trade tensions. The sell-off follows data earlier this week showing a 2.6% annual decline in passenger car sales across Europe, further dampening sentiment around the industry.
Shares of Ferrari tumbled nearly 8% after holding company Exor, owned by Italy’s Agnelli family, announced the sale of around 4% of its stake in the luxury carmaker.
Conversely, Rolls-Royce soared 16% after the aerospace and defense firm upgraded its medium-term targets, reported higher revenue and profit, and reinstated shareholder dividends in its full-year results.
British building materials supplier Howden Joinery was among the day’s worst performers, dropping over 6% after narrowly missing full-year revenue expectations despite announcing a £100 million ($126.7 million) share buyback program.
Trump’s renewed tariff threats came during his first Cabinet meeting on Wednesday, where he confirmed that duties on Canada and Mexico would take effect on April 2, with the EU next in line for the sweeping import levies.
“They’ve really taken advantage of us,” Trump said, claiming the EU blocks American cars and farm products while benefiting from free access to US markets.
In response, a European Commission spokesperson told CNBC the EU would respond “firmly and immediately” to any unjustified trade barriers imposed by Washington.
