On April 2, 2025, the U.S. announced new reciprocal tariffs, triggering a sharp decline in European bank shares. The Euro STOXX Bank Index fell about 16 % in the two days after the announcement, while the broader Euro STOXX index dropped roughly 12 %. A subsequent 90‑day pause announced on April 9 and comments from the U.S. administration on April 22 helped the index recover to pre‑announcement levels by May 2, and it has since risen to year‑to‑date highs.
Analysis of 22 European banks shows that those with higher exposure to manufacturing and wholesale‑retail trade loans experienced excess‑return losses of roughly 2.5 percentage points, compared with 1.9 percentage points for banks with lower exposure. Banks with stronger capital ratios saw smaller declines, while those with higher non‑performing‑loan ratios suffered larger losses. The size of a bank’s trading book did not significantly affect the tariff‑related price reaction.
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https://www.federalreserve.gov/econres/notes/feds-notes/u-s-reciprocal-tariff-announcement-and-european-bank-stock-performance-20250826.html
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