Asian markets weren’t the only ones to struggle after Gary Cohn, U.S. resident Donald Trump’s top economic advisor quit on Tuesday; European markets were also broadly lower following the news. German Economy Minister Brigitte Zypries said on Wednesday that she hoped Trump would change his mind about the import tariffs he’s seeking to impose on steel and aluminum. “The situation is serious,” Reuters quoted Zypries as saying.
Investors have voiced their agreement with their feet, sparking a selloff that sent most secotrs lower in the early hours of the European trading session. If implemented, the tariffs will have significant repercussions for Europe’s auto industry, and auto manufacturers were down nearly 1 percent on Wednesday morning, faring only slightly better than aluminum and steel manufacturers which slumped over 1.5 percent. The DAX was down 0.15 percent as of 9:48 a.m. GMT, and France’s CAC was down 0.27 percent. Only the FTSE remained on solid ground, trading near yesterday’s levels without any significant movement in either direction.
Although President Trump has continually maintained that “trade wars are good,” the International Monetary Fund’s (IMF) Managing Director Christine Lagarde commented on Wednesday that a global trade war could be a losing battle for everyone.
Lagarde told French radio station RTL that “The macroeconomic impact would be serious, not only if the United States took action, but especially if other countries were to retaliate, notably those who would be most affected, such as Canada, Europe, and Germany in particular.”