European stocks closed sharply lower on Monday, pulling back from record highs last week after US President Trump threatened to tariff the largest European economies. The Eurozone's STOXX 50 sank 1.7% to 5,922 and the STOXX 600 lost 1.2% to 607. The US President announced tariffs of 10% by the end of the month on Germany, the UK, France, Sweden, Norway, the Netherlands, Finland, and Denmark should they continue to oppose the sale of Greenland to the US. The tariffs would be extended to 25% by June. In response, the EU is in discussions over the potential imposition of tariffs on up to €93 billion worth of US goods. Luxury brands and auto manufacturers were among the hardest hit due to their exposure to US clients, with LVMH, Adidas, and Hermes dropping between 5% and 3.5%, while BMW and Volkswagen dropped 4% and 3%, respectively. In turn, defense companies rose on the news with Rheinmetall, Dassault, SAAB, and Leonardo adding between 4% and 1.5%.