Europe markets open lower as global rally stutters; investors digest Trump tariff implications

European stocks opened lower Tuesday as investors assess the global implications of U.S. President-elect Donald Trump’s plans to hike tariffs on China, Mexico and Canada.

The regional Stoxx 600 was down 0.61% at 8:10 a.m. London time as all sectors bar telecoms retreated. Autos led losses, down 2.1%.

The index had ended in the green for a third straight session on Monday, as global momentum in equities lifted Wall Street’s Dow Jones Industrial Average to a new record.

Trump on Monday evening said one of his first acts in office would be to impose an additional 10% tariff on all Chinese goods entering the U.S., and threatened a 25% tariff on products from Mexico and Canada, ending a regional free trade agreement.

Economists have previously flagged the potential inflationary impact of Trump’s fiscal plan, which could see the Federal Reserve cut interest rates at a slower pace. That in turn could boost the U.S. dollar against currencies such as the euro and sterling.

“Immediate market reaction looks negative,” analysts at Maybank said in a note Tuesday.

“However, these tariffs do differ quite a bit from what Trump had mentioned during his campaign of 60% for China and a 10% broad tariff for the rest of the world. Whilst the market maybe cautious of the risk that Trump maybe incrementally introducing the tariffs, we do note the possibility that the final imposition may not be quite the same as what was proposed by him.”

Europe is quiet on the data and earnings front Tuesday.

Investors will continue to analyze the latest merger and acquisition news from the banking sector, after UniCredit offered to buy its fellow Italian lender Banco BPM for roughly 10 billion euros ($10.5 billion).

In the United States, the Fed will release minutes from its November meeting which delivered a quarter percentage point rate cut.