FX.co ★ European Markets Plunge as China and U.S. Escalate Tariff War

The sell-off in European stock markets deepened on Wednesday following China's announcement of an increase in tariffs on U.S. goods, raising them from 34% to 84%, effective Thursday. The STOXX 50 index plummeted over 4%, landing at 4,585 points—the lowest point since August 2024. Simultaneously, the broader STOXX 600 fell by 3.8% to 468 points, marking its weakest performance since November 2023. This development intensified concerns about a growing trade conflict between the world's two largest economies. It followed the U.S.'s earlier decision in the day to significantly raise tariffs on Chinese imports to 104%. Investor confidence was further shaken by President Trump’s announcement of an imminent "major tariff on pharmaceuticals," suggesting the potential widening of the trade dispute into additional sectors. Additionally, the European Commission is contemplating imposing retaliatory tariffs of up to 25% on a diverse array of U.S. exports, valued at approximately €22.1 billion.