Shares in the US fell again on Thursday.
The S&P 500 dropped nearly 1.4%, taking it down roughly 10% from its most recent peak – a milestone known as a correction. The Dow slumped 1.3%, while the Nasdaq dropped almost 2%.
In Europe, London’s FTSE 100 was flat, while Germany’s Dax ended about 0.5% lower.
In Paris, the Cac 40 fell 0.6%, as shares of major spirit-makers were hit, with Pernod Ricard down 4% and Hennessy cognac maker LVMH falling 1.1%.
In interviews with US business media on Thursday, White House officials blamed the EU for escalating the dispute.
“Why are Europeans picking on Kentucky bourbon or Harley-Davidson motorcycles? It’s disrespectful,” Commerce Secretary Howard Lutnick told Bloomberg Television, describing the back-and-forth as “off the topic”.
Treasury Secretary Scott Bessent warned that a trade war was likely to inflict more economic pain on the EU than on the US, dismissing concerns that the clash could spiral.
“One or two items, with one trading bloc – I’m not sure why that’s a big deal for the markets,” he said.
In an interview with the BBC’s HardTalk, European central bank president Christine Lagarde, said that the EU had “no choice” but to retaliate.
“At the moment, everybody is positioning,” she said, adding that she expected the two sides to sit down and negotiate.
“Everybody will suffer” if the dispute were to develop into a full blown trade war, she warned.