European Shares Drop Amid Fears of Trump Tariffs

European shares declined on Tuesday due to concerns about potential tariffs from incoming U.S. President Donald Trump. These tariffs could impact major trading partners, including those in Europe, triggering a potential global trade war. Automakers and miners were among the worst-hit sectors.

In a significant downturn on Tuesday, European shares tumbled, led by automakers, as fears escalated over U.S. President-elect Donald Trump's tariff threats. The potential trade restrictions could impact some of America's largest trading partners, sparking concerns of a looming global trade war.

Trump, who is set to take office in January, announced plans to impose a 25% tariff on imports from Canada and Mexico. Additionally, he is considering an extra 10% tariff on Chinese imports. This news dampened the positive market sentiment spurred by the nomination of Scott Bessent as U.S. Treasury Secretary. While the dollar climbed, global equities saw a decline.

The pan-European STOXX 600 index saw a 0.6% drop by 0940 GMT, snapping a three-day winning streak. Investors feared that Europe's auto sector, among others, could suffer significantly under the new tariff conditions, which have reignited worries about global inflation and pressured monetary policy.

(With inputs from agencies.)