European Markets React as U.S. Tariffs Set Off Global Selloff

European markets faced a significant drop following the imposition of U.S. tariffs on Canada, Mexico, and China, sparking fears of similar actions against Europe. The STOXX 600 index decreased, and automaker shares plummeted amid trade concerns, while China's retaliatory tariffs led to further global economic uncertainty.

European markets took a hit on Tuesday as stocks fell sharply following the U.S.'s imposition of tariffs on Canada, Mexico, and China, raising fears of similar trade barriers being enforced on Europe. The STOXX 600 index dropped 0.8%, pulling back from prior record highs.

Germany's major index also receded from its peak, dropping about 1.6% after U.S. President Donald Trump criticized these countries for not adequately controlling the influx of fentanyl. The automotive sector, vulnerable to trade measures, saw significant losses.

China's swift retaliation with 10%-15% tariffs on certain U.S. imports exacerbated trade tensions, causing volatility in global financial markets. Meanwhile, select European defense stocks gained, anticipating increased regional military expenditures as the U.S. paused aid to Ukraine.

(With inputs from agencies.)