European Stock Markets Decline Amid Banking and Healthcare Concerns, Amid Tension Over Tariffs

European stocks closed lower on Friday, led by banks and healthcare stocks, as the market reacted to US President Donald Trump's tariff announcements. The STOXX 600 index fell 1%, breaking a four-day winning streak, while the DAX and FTSE indices declined 0.8% and 0.4%, respectively. Trump announced a 35% tariff on Canadian imports and suggested a 15% or 20% tariff on other countries. HSBC estimates that a 10-20% increase in US tariffs on regional imports could suppress the FTSE Europe index's global earnings by 1.2-2.4% and net profits by 4-6%.

European stocks closed lower on Friday, led by banks and healthcare stocks, as the market reacted to US President Donald Trump's tariff announcements. The STOXX 600 index fell 1%, breaking a four-day winning streak, while the DAX and FTSE indices declined 0.8% and 0.4%, respectively.

Trump announced a 35% tariff on Canadian imports and suggested a 15% or 20% tariff on other countries. The latest tariff threats have put pressure on European markets, with investors reacting to the potential impact on regional economies and trade relations.

HSBC estimates that a 10-20% increase in US tariffs on regional imports could suppress the FTSE Europe index's global earnings by 1.2-2.4% and net profits by 4-6%. The uncertainty surrounding the US tariff policy has led to a sell-off in European stocks, with sectors like banks and healthcare feeling the brunt of the impact.

The US's latest tariff announcements come amidst ongoing trade negotiations between the US and the EU. The EU has been working towards a trade deal with Washington, but the potential for higher tariffs on key sectors like automobiles and pharmaceuticals has raised concerns among European economies.

Germany and Ireland are standing out as the two most exposed EU economies threatened by higher US tariffs. According to Bruegel, Germany could see a long-term negative impact of around 0.4% of its GDP from tariffs, while Ireland, with over half of its goods exports directed towards the US market, could face significant challenges if the pharmaceutical sector is targeted [1].

Investors are closely watching the developments as the US continues to work on deals with major partners, including the EU, Canada, and India. The potential for higher tariffs and their impact on global trade relations remain a key concern for financial markets.

References:
[1] https://www.euronews.com/business/2025/07/11/which-european-economy-stands-to-suffer-the-most-from-us-tariffs