Trump's threat of a 30% tariff on EU goods from 1 August puts Europe’s bullish growth narrative at risk. With investors heavily positioned in eurozone assets, Goldman warns of a 1.2% GDP hit, raising fears of a sharp reversal if tensions escalate.

The bloc’s trade commissioner says the two sides were close to a deal before the president last week threatened to impose a 30 percent levy.

The European Union has warned that its trade with the United States could be effectively wiped out if Washington makes good on its threat to slap a 30% tariff on goods imported from the bloc.