Europe Ends in the Green After Trump's Tariff Announcements: A Volatile Rally Amid Lingering Risks

The European markets’ tumultuous journey through Trump’s tariff announcements in April 2025 offers a stark reminder of how geopolitical volatility can upend even the most resilient economies. While the Stoxx 600 closed higher last week following a 90-day tariff reprieve, the path to green was anything but straightforward. Let’s dissect the chaos—and what it means for investors.

The Initial Selloff: Luxury, Autos, and Logistics Take the Brunt

When Trump announced tariffs of 20% on the EU and 10% on the U.K. in early April, European equities plunged. The Stoxx 600 fell 2.7%, with luxury stocks leading the rout. Automakers and logistics firms also suffered: Volvo Cars (VOLCAR-B.ST) dropped 9%, while Maersk (MAERSK.B) slid 7.5% as supply chain fears spiked.

The luxury sector’s collapse reflects deepening concerns over consumer spending. shows its shares still trading 20% below pre-tariff levels, highlighting lingering investor pessimism about discretionary spending.

Political Pushback and Retaliation: Europe Fights Back

European leaders wasted no time countering Trump’s moves. Germany’s Economy Minister Robert Habeck vowed solidarity, while the EU announced retaliatory tariffs on U.S. goods like corn and plate glass. France’s wine industry, facing an 800 million euro export hit, spurred President Macron to convene emergency talks with exporters.

The U.K., though hit with lower tariffs, isn’t immune. Business Secretary Jonathan Reynolds warned of broader economic fallout, given the U.K.’s reliance on global trade.

The 90-Day Reprieve: Markets Rally, But Risks Remain

Trump’s last-minute pause on tariffs (excluding China) sparked a sharp rebound. The S&P 500 surged 9.5%—its best day since 2008—but European markets were slower to recover. The Stoxx 600 closed the week up 1.2%, with automakers and logistics stocks leading the rally.

However, the reprieve is fragile. underscores Europe’s slower recovery, reflecting deeper structural concerns. Meanwhile, tariffs on China remain at 125%, and the White House hinted at future investigations into pharmaceutical tariffs, adding uncertainty.

The Economic Fallout: Growth and Energy Markets Under Pressure

Economists are grim. High Frequency Economics projects a 10% hit to U.S. Q2 GDP, while ING forecasts a 0.3% drag on eurozone growth over two years. OPEC+ accelerated oil production hikes, driving prices down 6% as traders brace for weaker demand.

The energy sector’s response is telling. This reflects fears of a global demand slowdown—a double-edged sword for Europe, which relies on exports but benefits from cheaper energy.

Where to Invest Now?

The 90-day pause offers a brief window for selective opportunism.
- Luxury stocks: Avoid until consumer confidence stabilizes. shows a 4% drop that hasn’t fully rebounded.
- Energy and industrials: Look to companies insulated from trade wars, like renewable energy firms or diversified industrials.
- Pharmaceuticals: Though excluded from tariffs now, risk remains if 232 investigations expand.

Conclusion: A Fragile Calm

Europe’s green finish is a reprieve, not a resolution. The Stoxx 600’s 1.2% weekly gain masks deeper vulnerabilities: luxury stocks are still battered, geopolitical tensions with China persist, and inflation risks loom. Investors should treat the rally as a chance to position for sectors with defensive profiles or exposure to cheaper energy.

The key takeaway? symbolizes the current paradox: short-term relief, long-term uncertainty. Stay nimble, focus on fundamentals, and brace for more volatility as trade wars reshape global markets.

The data is clear: Trump’s tariffs have already cost Europe dearly. Whether the 90-day pause buys enough time for a lasting solution remains to be seen. For now, caution—and a close eye on trade policy—reign supreme.