Despite recent tariff threats from US President Donald Trump, European markets have shown resilience, hitting new highs. Investors appear to be looking beyond Trump’s policies, focusing on broader market trends and economic growth. Trump’s vocal threats of tariffs on China and the European Union have sparked concerns, but European stock indexes continue their upward trajectory.

Trump’s Tariff Threats and Trade Policy Shifts

President Trump has delivered multiple tariff warnings, particularly targeting China and the European Union. During a White House event, Trump indicated he was considering a 10% tariff on China, citing issues like the fentanyl trade and a significant trade deficit. He also mentioned the US’s $350 billion deficit with the EU, asserting that Europe treats the US unfairly. While Trump threatened tariffs on Canada, Mexico, and Russia, these moves have not yet materialized into official policies. A review of US trade relations is ongoing, with a final report due by April 1st, leaving room for negotiation.

In addition to trade tensions, Trump has threatened Russia with sanctions, signaling a potential shift in US policy aimed at pressuring Russia to halt its actions in Ukraine. This has added to global uncertainty, particularly as the war in Ukraine continues to affect European economies.

European Markets Look Past the Tariffs

While Trump’s threats have stirred up concerns, European stock markets have largely ignored the potential impact. The Euro Stoxx 600 reached a new high, and Germany’s DAX climbed for the seventh consecutive session, setting a fresh record. France’s CAC 40 and the UK’s FTSE 100 also saw notable gains, despite political uncertainties.

The optimism in European luxury goods stocks has contributed to market strength, fueled by positive earnings reports and expectations surrounding the Chinese New Year shopping season. These factors, combined with a more stable euro, have kept European markets buoyant, even as President Trump’s tariff stance looms.

Looking ahead, the US dollar has remained strong, partly driven by Trump’s policies and the Federal Reserve’s hawkish stance on interest rates. However, analysts caution that Trump’s unpredictable decisions could lead to higher volatility across global markets.