European stock markets closed March with negative results, marking their first monthly dip this year, as investors prepared for the announcement of Trump's reciprocal tariffs and 25% import taxes on cars. On the final trading day of March, the pan-European Stoxx 600 index fell by 1.51%, the DAX by 1.33%, and the CAC 40 by 1.58%. Throughout the month, the three major benchmarks experienced declines of 3.8%, 2.38%, and 4.09%, respectively.

Despite this setback, European stocks have performed better than their US counterparts so far this year. Wall Street saw its most significant monthly drop since December 2022 due to concerns about the potential economic impact of escalating tariffs.

Trump is scheduled to unveil reciprocal tariffs on Wednesday, which he has labeled as America's "Liberation Day." These tariffs will apply to all countries without exemptions, aimed at rectifying what he sees as unfair trade practices that have disadvantaged the United States for years. The European Union, Japan, India, and Canada are expected to be among the targeted countries, facing higher import duties on US goods. The imposition of 25% tariffs on cars will also commence on the same day.

Furthermore, Trump has indicated plans to place tariffs on medical supplies, lumber, semiconductors, and potentially copper in upcoming weeks, following a previous investigation into copper imports. In March, he imposed tariffs on steel and aluminum, affecting imports from Mexico, Canada, and China.

The escalation of Trump's tariff policies is anticipated to impact various key European sectors, particularly luxury goods, automotive, and healthcare industries. Consumer cyclical stocks suffered the most in the Stoxx 600 index in March, dropping by 12%, predominantly driven by losses in luxury and automaker shares. Luxury brands like LVMH and Hermès saw declines of 18% and 12%, respectively, while automakers like Mercedes-Benz, Volkswagen, BMW, and Stellantis experienced significant drops in anticipation of the tariffs.