Milan's stock exchange and other European stock exchanges opened lower on April 3, 2025, reacting sharply to the announcement of new tariffs by U.S. President Donald Trump. The tariffs, which are set to impose a 20% tax on exports from the European Union to the United States starting on April 9, were met with immediate concern across the markets. An initial rate of 10% will take effect from April 5, 2025, but some goods, including pharmaceuticals, semiconductors, and energy products, are currently exempt from these tariffs. However, the 25% tariffs on cars, announced by Trump the previous week, remain in place.
As trading began, the FTSE MIB index fell by 2.12% to 37,640 points, reflecting the broader anxiety in European markets. By around 9:40 AM, the index had decreased further, showing a decline of 1.6% after dropping as much as 2%. This trend was consistent across other European indices, with Frankfurt down 1.48%, Paris down 1.94%, Madrid down 0.83%, and London down 1.39%. In stark contrast, the UK is the only European trade partner that will face a 10% tariff.
The banking sector was particularly hard hit, with significant losses reported. Bper Banca saw a decrease of 4.57%, while Unicredit dropped by 4.15%. Other banks, including Banca Popolare di Sondrio and Finecobank, also faced declines of 4.09% and 3.76%, respectively. This downturn in the banking sector is indicative of the broader fears regarding the impact of global trade tensions on international business activities.
In the commodities sector, the markets reacted negatively, with energy and raw materials reflecting the global economic uncertainty. The price of Brent crude oil fell to $72.40 per barrel, a drop of 3.40%. Meanwhile, gold, which had recently reached record levels, was trading at $3,122 per ounce, showing a slight correction with a decrease of 0.38%. Market volatility was further highlighted by a 16% increase in the Vix index, which measures market risk.
Despite the overall negative trend, some sectors showed resilience. Utility companies, led by A2a, saw gains, with A2a increasing by 2.60%, Terna rising by 2.01%, and Snam climbing by 1.52%. Campari also performed well, with a rise of 2.16%. Additionally, Stellantis, which initially opened lower, managed to reverse its fortunes and reported a gain of 1.06%.
The immediate market reaction underscores the growing fears of a trade war and its potential to slow down the global economy. Investors are now watching closely for responses from the countries affected by these tariffs. The uncertainty surrounding the outcome of potential negotiations adds to the tension, as many are concerned about the possibility of further escalations in trade disputes.
In Asia, the Nikkei 225 stock index in Japan closed down 2.73% after starting with a drop of 4%. Hong Kong's market also fell by 1.86%, while Shanghai experienced a smaller decline of 0.24%. Vietnam's stock exchange was the worst performer in the region, decreasing by 6.17%, attributed to a high tariff of 46% imposed on the country.
As the day progressed, markets continued to react to the news, with futures on the American S&P 500 and Nasdaq indices falling by over 3%. The Russell 2000 index, which tracks small and mid-sized companies, saw an even steeper decline of 4.25%. In the automotive sector, Toyota's stock fell by 6.80%, and Nissan's stock decreased by 4.82%, as reports indicated that the company would suspend some operations in Mexico due to the tariffs.
Overall, the reaction to the new tariffs reflects a broader sentiment of caution among investors. The uncertainty surrounding global trade policies and the potential for economic slowdown are pressing concerns that continue to weigh heavily on market performance. As the situation develops, analysts and investors alike will be closely monitoring the responses from affected countries, as well as any further announcements from the U.S. administration regarding trade policies.
In conclusion, the ongoing trade tensions and the imposition of new tariffs have created a ripple effect throughout global markets, with significant declines reported across major indices. The banking sector, in particular, has felt the brunt of these developments, while some sectors, such as utilities and certain consumer goods, have shown resilience. The next steps in this unfolding trade saga will be crucial in determining the trajectory of the markets in the coming weeks.
