(Reuters) – A slump in shares of automakers, miners and chipmakers led European stocks to their biggest losses in more than seven months on Friday after Washington’s announcement of new tariffs on Chinese goods raised fears of a further hit to global growth.

The pan-European STOXX 600 index sank 2.5% to hit a six-week low. Germany’s trade-sensitive DAX index .GDAXI slumped 3.1%, while losses for luxury goods makers, which draw a large part of their revenue from China, dragged down France’s CAC 40 .FCHI by 3.6%.

Abruptly ending a temporary trade truce between the two countries, U.S. President Donald Trump said on Thursday he would impose a 10% tariffs on $300 billion of Chinese exports to the United States from September 1, prompting Beijing to warn of retaliation.

“When the global economy seems to be quite dependent on the outcome of trade negotiations, that would almost necessarily mean the markets are quite volatile as the negotiations progress,” said Bert Colijn, senior economist for eurozone at ING in Amsterdam. “It’s a result of the fact that politics has taken center stage for the macro outlook.”

Further spooking investors, Bloomberg reported that Trump is scheduled to make a statement on trade with the European Union at 1745 GMT on Friday.

The technology index .SX8P, which includes chipmakers that rely heavily on China for their revenue, dropped 3.7%. Shares of Siltronic (WAFGn.DE), Infineon (IFXGn.DE), STMicro (STM.MI) and ASML (ASML.AS) dropped 4.8% to 6.3%.

Shares of basic resources companies .SXPP fell the most among European sectors with a 4.6% drop.

Most of Europe’s main markets were set for their worst week since May, when a sudden breakdown in trade talks between China and the United States hammered markets.

A rally since then had been fuelled by hopes that major central banks would adopt looser monetary policy to offset the trade war’s impact on growth, but the European Central Bank and the U.S. Federal Reserve both disappointed investors last month with stances that were more cautious than expected.

However, a spike in trade tensions again pushed money markets to bet the Fed and the ECB will cut rates next month.

Expectations of lower borrowing costs sent yields on European government bonds to new lows and piled pressure on banking shares .SX7P. A couple of weak earnings in the sector also weighed. [GVD/EUR]

Royal Bank of Scotland (RBS.L) fell 6.5% after warning that deteriorating economic conditions before Brexit were likely to derail next year’s profitability, while French lender Credit Agricole (CAGR.PA) dropped 4.9% after it said that a weak performance at its corporate and investment unit had weighed on its profits.

Automakers .SXAP were another weak spot, with Italian luxury carmaker Ferrari (RACE.MI) failing to lift its guidance for 2019 despite strong results in the first part of the year. Its shares were down 4.4%.

Tyremaker Pirelli (PIRC.MI) dropped 6.9% after cutting revenue guidance for the second time this year, joining a string of suppliers hit by a broader auto industry downturn.

Sectors such as utilities .SX6P, healthcare .SXDP and telecoms .SXKP – seen as less risky during times of economic uncertainty – posted minimal losses among the major indexes.

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