European Defense Shares Plunge Amid Trump Tariffs

Defense stocks have borne the brunt of the slump in European stock markets, with shares in Germany's Rheinmetall AG falling 27%, the sharpest one-day decline ever, Bloomberg reports.

Shares of France's Thales SA, Germany's Hensoldt AG, Italy's Leonardo SpA and Sweden's Saab AB also fell. "The hopes of defense companies in Europe have collided with reality. Increased defense spending has yet to materialize, and we are now in a situation of a sell-off in stocks overall," said Chris Beauchamp, chief market analyst at IG Group.

In 2024 , the EU's defense spending was €326 billion, or 1.9% of the bloc's GDP, according to the European Defense Agency. The EU plans to increase spending in the next four years: in early March, the community's countries approved the €800 billion ReArm Europe rearmament plan, which was presented by European Commission President Ursula von der Leyen.

The collapse of global markets was triggered by tariffs announced by U.S. President Donald Trump. A REUTERS report that U.S. company Howmet Aerospace Inc., which supplies parts for Airbus SE and Boeing Co. aircraft, declared force majeure because of Trump's tariffs further darkened the mood, the agency notes.

Germany's DAX stock index fell nearly 10% at the start of trading on Monday, April 7. Over the course of the week, it has fallen more than 8%, the biggest weekly drop since the start of hostilities in Ukraine .

Europe's Stoxx 60 index fell 5.8%, extending its fourth straight session of decline. The Stoxx 60 is on track for its sharpest one-day drop since the start of the covid-19 pandemic .

Commerzbank and Deutsche Bank lost 10.7% and 10% respectively on Monday.

Trump, commenting on the stock market declines, said: "I don't want anything to go down. But sometimes you have to take medicine to fix something."

Since March, the US has imposed 25% tariffs on $28 billion worth of EU steel and aluminum imports . On April 2, Trump also announced the introduction of "mirror" tariffs on dozens of countries. For the European Union, the tariff will be 20%.

Europe is ready to respond to tariffs, said European Commission President Ursula von der Leyen, but suggested "moving from confrontation to negotiations."

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