Stock markets down, dollar drops amid Trump’s Europe tariffs
Trump said he would impose an additional 10% import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, which will increase to 25% on June 1 if no deal is reached
Stock markets are facing volatility after President Donald Trump vowed to impose tariffs on eight European nations until the U.S. is allowed to buy Greenland, injecting new trade uncertainty as stocks slipped and the dollar broadly weakened.
Trump said he would impose an additional 10% import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, which will increase to 25% on June 1 if no deal is reached.
Major European Union states decried the tariff threats over Greenland as blackmail on Sunday.
The euro firmed 0.26% to $1.1628 after it initially declined to its lowest since November as investors sold off the dollar broadly, lifting other major rival currencies.
In European markets, EUROSTOXX 50 futures and DAX futures both dropped 1.1%.
Hopes that the tariff situation has calmed down for this year have been dashed for now – and we find ourselves in the same situation as last spring, said Berenberg chief economist Holger Schmieding.
Trump’s sweeping “Liberation Day” tariffs in April 2025 sent shockwaves through markets. Investors then largely looked past U.S. trade threats in the second half of the year, viewing them as noise and responding with relief as Trump made deals with Britain, the EU and others.
While that lull might be over, market moves on Monday could be dampened by the experience that investor sentiment had been more resilient than expected in 2025 and global economic growth stayed on track.
Stock futures were 0.7% lower in early Asian hours. The cash Treasury market was shut, but 10-year futures firmed 1 tick.
The implications for the dollar were less clear, although the U.S. currency was broadly down on Monday.
The dollar weakness lifted the safe haven yen and Swiss Franc. Bitcoin, a liquid proxy for risk, dropped around 3% to $92,602.64.
While you would argue that the tariffs threaten Europe, in fact, it’s actually the dollar that is bearing the brunt of it, because I think markets are pricing in increased political risk premia on the U.S. dollar, said Khoon Goh, head of Asia research at ANZ.
Capital Economics said the countries most exposed to increased U.S. tariffs were the UK and Germany, estimating that a 10% tariff could reduce gross domestic product in those economies by nearly 0.1%, while a 25% tariff could knock 0.2%–0.3% off of output.
European stocks are near record highs. Germany’s DAX and London’s FTSE index are up more than 3% this month, outperforming the S&P 500, which is up 1.3%.