Trump's Tariff Tensions: European Stocks Slump Amid Trade Threats

European shares took a nosedive on Monday, largely driven by the automobile sector, as U.S. President Donald Trump's fresh threats to levy significant tariffs on the European Union and Mexico stirred investor anxiety.

The pan-European STOXX 600 index experienced a 0.5% fall to 544.74 points by 0830 GMT, accompanied by declines in regional indexes, except for the UK's FTSE 100, which rose slightly by 0.2%. This tension follows President Trump's weekend announcement of potential 30% tariffs on EU and Mexican imports from August 1, after unsuccessful trade talks with key U.S. partners.

Markets are apparently digesting the news cautiously, with Michael Field from Morningstar noting a tempered market reaction as parties expect potential negotiation improvements. Simultaneously, the EU is maintaining a firm yet cooperative stance, preparing for possible tariffs on U.S. goods if discussions falter, while monitoring the automobile sector's immediate decline in light of no exemption under Trump's tariff proposal.

(With inputs from agencies.)