The pan-European STOXX 600 index fell 1.1 percent by 0710 GMT, with banks proving a drag after a slew of negative updates.
Hopes of a breakthrough lifted markets on Tuesday, but investors turned more cautious stance after looking for a deal during the night that never came.
The fresh trade tensions come ahead a U.S. Federal Reserve meeting which is expected to see interest rates reduced by 25 basis points (bps) in its first rate cut in more than a decade.
The pan-European STOXX 600 climbed 0.2% after losing 1.4% over the past four sessions. Germany’s DAX futures rose and Britain’s FTSE futures gained 0.3%.
In Turkey, the lira, stocks and government dollar bonds weakened after President Tayyip Erdogan dismissed the central bank governor, a move that fueled worries about monetary policy independence.
The Fed on Wednesday suggested rate cuts might start as soon as next month, saying it was ready to take action in the face of growing economic risks.
The pan-European STOXX 600 climbed 0.62 percent, on course for a sixth day of gains in the last seven, with Frankfurt’s DAX racing up 1.2 percent as German investors returned from a one-day holiday.
European shares were expected to open modestly higher, with futures for Eurex EURO STOXX 50 index and Germany’s DAX ticking up 0.4 and 0.3 percent, respectively.
MSCI world equity index, which tracks shares in 47 countries, was down slightly at 0905 GMT, as investors shunned assets considered risky in times of economic and political strife.
In Europe, the broader Euro STOXX 600 edged up 0.3%, with Germany’s DAX rising 0.6%, while France’s CAC 40 climbed 0.2%.
An index of European shares fell as much as 0.5 percent in early European trading with the German stock index down 0.4 percent. U.S. stock futures were down 0.4 percent, pointing to a weak start on Wall Street.
“The trade war is driving markets at the moment,” said Rory McPherson, head of investment strategy at Psigma Investment Management in London.
Chinese Vice Premier Liu He was heading to Washington for two days of talks but Trump’s insistence that China “broke the deal”, and then Beijing’s response that it would retaliate against tariffs were ratcheting up the stakes.
London dipped 0.2 percent as it had to play catch-up after a long weekend, but Frankfurt, Paris and the pan-European STOXX 600 index all flitted between gains and losses.
Oil and metals markets added to the pressure on stocks on Thursday with traders sending copper to a 2-month low.
European shares followed Asia lower, pulling back from eight-month highs, with the pan-regional STOXX 600 index slipping 0.4 percent.
Oil prices jumped to near six-month highs on Tuesday as the United States tightened sanctions on Iran, sending shares of energy companies higher but largely failing to help the currencies of the main crude-oil producers.
After a subdued open, European markets fell further after French and German surveys of purchasing managers in the manufacturing sector for April showed activity continuing to contract.
European shares followed their Asian counterparts and opened marginally higher.
Spreadbetters pointed to a subdued start for European shares with futures for London’s FTSE off 0.3 percent while those of Germany’s Dax and Eurostoxx each fell 0.1 percent. E-minis for the S&P 500 were a shade weaker.