European markets head for dramatic declines at the open as traders assess new

This is CNBC’s live blog covering European markets.

European stock markets are expected to fall dramatically at the open Thursday as traders react to U.S. President Donald Trump’s trade tariffs announcements.

The U.K.’s FTSE 100 index is expected to open 121 points lower at 8,513, Germany’s DAX down 396 points at 21,994, France’s CAC 127 points lower at 7,731 and Italy’s FTSE MIB 547 points lower at 38,010, according to data from IG. 

The sharp declines expected at the start of the European trading day come after Trump on Wednesday signed an aggressive and far-reaching “reciprocal tariff” policy, with his plan setting a 10% baseline tariff across the board.

Read CNBC’s live blog tracking the tariffs and global reaction here.

The president announced a slew of “reciprocal tariffs” on more than 180 countries and territories, including a 20% tariff on goods being imported from the EU and 10% on goods from the U.K.

The U.S.’ biggest economic rival China was hit with a new 34% tariff rate which will come on top of the existing 20% tariffs on U.S. imports from China, taking the effective total tariffs to 54%.

See Trump’s list: More than 180 countries and territories facing reciprocal tariffs

European Commission President Ursula von der Leyen responded to the tariffs announcements by saying the European Union is preparing further countermeasures against U.S. tariffs if negotiations fail. China, meanwhile, said Thursday that it would take “resolute counter-measures” against the sweeping U.S. tariffs and urged Washington to cancel the unilateral tariff measures.

European exporters will be closely watched during the trading day, with shares of automakers expected to slide as Trump’s 25% tariffs on imported vehicles to the U.S. take effect. Shares of industrial machinery exporters are also likely to see declines.

Data releases in Europe Thursday will include euro zone services and manufacturing purchasing managers’ index data for March.

Tariffs to dent U.S. second-quarter GDP by 10%: High Frequency Economics

U.S. tariff policies announced Wednesday would see U.S. gross domestic product take a 10% hit in the second quarter of 2025, High Frequency Economics Chief Economist Carl Weinberg said in a note Thursday, potentially pushing the world’s largest economy into a recession after a predicted small contraction in the first quarter.

Weinberg estimated that tariffs would take $741 billion out of U.S. household real incomes or corporate profits, or more if fully accounting for all tariffs on aluminum, steel and non-exempt trade with Canada and Mexico. His calculation of an average tariff rate on two-dozen countries of at least 30% is greater than expected, he said.

The U.S. economy will also be hit by price rises, Weinberg added, with the rate of an imported item such as softwood lumber higher by up to 25% — even if some of the inflationary impact is cushioned by downward pressure on the economy.

“Once a company fails, it will not spring back to life even if tariffs are reversed. If profits are hit — they are sure to be — then will stock prices crack? Will there be collateral damage as the economy adjusts to this new tariff regime? We are concerned.”

— Jenni Reid

Europe’s ‘worst economic nightmare’: Economists react to tariff announcement

Europe’s “worst economic nightmare just came true,” economists at ING said in a note late Wednesday regarding news on 20% U.S. tariffs.

“While in recent weeks, the longer-term outlook for Europe had clearly brightened with the European defence initiatives and the German fiscal U-turn, tariffs have just darkened the near-term outlook.”

The EU’s willingness to negotiate is admirable but may be a lengthy process and does not appear to have much receptivity stateside, the ING economists said, potentially making an offer to buy more U.S. goods a quicker option for a deal.

EU countermeasures will include reinstating suspended tariffs on U.S. goods and adding higher counter-tariffs to a range of products including agriculture and food, clothing, furniture, household appliances, construction, steel, cars and car parts and precious metals, they added.

Overall, ING estimates 20% blanket tariffs could cut 0.3 percentage points from euro zone economic growth over the next two years, accounting only for direct and indirect trade impact.

Berenberg economists Atakan Bakiskan and Salomon Fiedler said the euro zone impact was “serious” but “could have been worse.”

“We expect the damage of the escalating…