European markets drop after tax threat

EUROPEAN markets mostly fell yesterday while Asia was mixed as investors digested Donald Trump’s latest trade war salvos that saw him threaten to hit the EU and Mexico with 30% tariffs.

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The US president’s outburst came after a series of announcements last week including warnings of 50% levies on copper and Brazilian goods, 35% on Canadian goods, and a possible 200% charge on pharmaceuticals.

While observers warn the measures could deal a hefty blow to the global economy, investors are largely optimistic that governments will hammer out agreements before the White House's August 1 deadline.

In announcing his latest measures on Saturday, Trump cited Mexico's role in illicit drugs flowing into the US and a trade imbalance with the EU.

The move threw months of painstaking talks with Brussels into disarray.

European Commission chief Ursula von der Leyen has insisted the bloc still wants to reach an accord and at the weekend delayed retaliation over separate US duties on steel and aluminium as a sign of goodwill.