European markets head south after Trump slaps 30% tariff on EU

European stocks open lower as investors react to latest tariff threat

We're around 30 minutes into the first trading session of the week, and Europe-listed stocks are broadly edging lower as trading kicks off.

The pan-European Stoxx 600 was last seen trading close to 0.5% lower, with most sectors in negative territory. Tariff-sensitive autos stocks led losses, with the Stoxx Europe Automobiles index shedding around 1%.

Looking at major regional bourses, Germany's DAX is leading the sell-off after moving 0.8% lower, while London's FTSE 100 is bucking the regional trend to trade 0.2% higher.

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EU official says bloc ‘very close to an agreement’ with U.S. on trade

EU Trade Commissioner Maros Sefcovic told reporters on Monday that U.S. President Donald Trump's threatened 30% tariff on the European Union would practically eradicate trade between the two economic powers.

In comments cited by news agency Reuters, however, Sefcovic also expressed optimism that the U.S. and the EU could find a solution.

“The feeling on our side was that we are very close to an agreement,” he reportedly said ahead of an EU trade ministers' meeting in Brussels.

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Tariffs are hitting European firms hard. Here are the sectors to watch

Earnings estimates for companies around the world have fallen sharply in recent months as analysts attempt to predict the impact of new U.S. tariffs.

Earnings per share across Europe's benchmark Stoxx 600 are expected to fall 0.2% on an annualized basis in the second quarter, according to LSEG I/B/E/S research. On April 1, ahead of Trump's so-called “Liberation Day,” analysts expected 7.2% growth.

Analysts are watching three key sectors as Europe's largest companies prepare to report on their earnings — read about them here.

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Bank of England‘s Bailey says ’path is downward for UK interest rates

In an interview with British newspaper The Times, Bank of England Governor Andrew Bailey said the central bank would deepen its rate-cutting cycle should the U.K.'s job market slow.

His comments came as the U.K.'s most recent inflation print remained elevated at 3.4%, with economists polled by Reuters expecting the June reading to be flat when it's released on Wednesday.

But Bailey told The Times there were “consistent” signs of British firms “adjusting employment,” and said the U.K.'s economic struggles were creating “slack” that would help cool inflation.

“I really do believe the path is downward,” he said in the interview, which was published on Sunday night. “If we saw the slack opening up much more quickly, that would lead us to a different conclusion.”

Markets are currently pricing in a 25-basis-points cut at the Bank of England's next meeting in August, according to LSEG data.

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Here's a quick dive on EU-US trade

Following President Trump's decision to impose 30% tariffs on imports from the EU — we wanted to take a deep dive into the volumes of trade between the two.

Together, the EU and U.S. make up almost 30% of all global trade in goods and services and 43% of global GDP. In 2024, trade between the two totaled some 1.7 trillion euros — that's the equivalent of 4.6 billion euros per day, EU data shows.

But is the EU's trade surplus as one-sided as the White House suggests?

When it comes to goods, in 2024 the EU exported around 530 billion euros' ($618 billion) worth to the U.S. and imported 335 billion — giving it a surplus of nearly 200 billion euros. But as Brussels is quick to point out: the U.S. leads the way in services where it enjoys a surplus of 150 billion dollars.

All in all, that gives the EU a total trade surplus of just $50 billion.

And finally - what are the European industries and countries most exposed to U.S. tariffs?

By sector, it is far and away the pharmaceutical sector, followed by autos and aircraft machinery.

Looking at individual economies, Germany and Ireland stand out as the most exposed: Almost a quarter of all German exports are destined for the U.S., while for Ireland that figure is more than a third.

Here are the opening calls

Good morning from London, and welcome to CNBC's live blog covering all the action and business news in European financial markets on Monday.

Futures data from IG suggests regional markets will start the week flat to lower, with London's FTSE 100 expected to flat, Germany's DAX down 0.6% and France's CAC 0.5% lower. Italy's FTSE MIB is seen opening 0.7% lower.

The dour mood for European markets comes after U.S. President Donald Trump announced at the weekend that he would impose a 30% tariff on goods imported from the EU, dealing a blow to the bloc after several months of negotiations to try to reach a trade deal. The duty will go into effect on Aug.1.

The EU has said it will not retaliate straight away but would look to reach a deal.

“Imposing 30 percent tariffs on EU exports would disrupt essential transatlantic supply chains, to the detriment of businesses, consumers and patients on both sides of the Atlantic,” European Commission President Ursula von der Leyen said in a statement.

She said the EU remains “ready to continue working towards an agreement by August 1.”

“At the same time, we will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required.”