European shares dropped on Tuesday, as Italian banks came under pressure after the cabinet approved a 40% windfall tax on lenders, while sticky inflation print from Germany and weak China trade data further dented risk sentiment.

By 0707 GMT, the pan-European STOXX 600 index (.STOXX) was down 0.3%.

Italian banks such as Intesa Sanpaolo (ISP.MI) and UniCredit (CRDI.MI) fell more than 5% after Deputy Prime Minister Matteo Salvini said the 40% levy on banks’ extra profits will feed items such as a reduction of the tax wedge, tax cuts and financial support to holders of mortgages on first homes.

Italy’s banking-heavy FTSE MIB (.FTMIB) slid 1.4%, while European banks (.SX7P) dropped 1.8% after ratings agency Moody’s cut credit ratings of several small- to mid-sized U.S. banks and said it may downgrade some of the biggest lenders in the United States.

Germany’s DAX index (.GDAXI) fell 0.4% after data showed inflation eased to 6.5% in July, but was in line with economist expectations.

China-exposed miners (.SXPP) and automakers (.SXAP) fell after data revealed imports and exports in the world’s second-largest economy fell much faster than expected in July, threatening growth prospects and heightening pressure on Beijing to provide fresh stimulus.

Shares of Glencore (GLEN.L) slumped nearly 3% after the global miner said its earnings had halved in the first half.