LONDON (Reuters) - Airbus (AIR.PA) shares fell to four-month lows and Pernod Ricard SA (PERP.PA) extended losses on Wednesday after Washington won approval to impose tariffs on $7.5 billion worth of European goods, opening a new front in the global trade war.
While the ruling was in line with expectations, the news deepened a rout that had punished European stock markets throughout the session as investors worried about a tit-for-tat transatlantic trade war as the global economy falters.
The planemaker shares ended the day down 2% at their lowest since early June, reversing a brief move higher.
French drinks company Pernod Ricard came under fresh pressure too. The stock was down 0.1%.
The U.S. Trade Representative’s provisional list of products that are eligible to be targeted with tariffs ranges from Airbus jets themselves to helicopters, wine, handbags and cheese.
“We are seeing European stocks hit hard in anticipation of a widening rift between the U.S. and EU, leading to a similar tit-for-tat trade war” to Washington’s spat with China, said Joshua Mahony, senior market analyst at IG in London.
“(U.S. President Donald) Trump knows what hurts the EU most, and his willingness to act against automakers could leave that sector exposed to future actions.”
An index of European carmakers and auto suppliers .SXAP closed down 2.6%, while the aerospace and defence index ended 2.4% lower for its worst day in two months.
Reporting by Josephine Mason, Julien Ponthus and Danilo Masoni; Editing by Lisa Shumaker