Germany's DAX, the most trade-sensitive among Europe's regional indexes, dropped 0.9pc by 0929 GMT, while the broader European STOXX 600 index fell 0.7pc.
U.S. President Donald Trump on Tuesday threatened to raise tariffs on Chinese imports if no trade deal was reached with Beijing.
Clouding the possibility of a deal further, China condemned a U.S. legislation aimed at protecting human rights in Hong Kong, saying that the U.S. should stop interfering in Hong Kong and Chinese affairs.
That unsettled investors who had expected few roadblocks to a "phase one" trade deal between the two sides, pushing Europe's equities benchmark to a four-year peak in the previous session.
"The reason why risk assets are turning off now is that a primary reason for the rally we've seen is because of an increased likelihood of a (trade) deal and this on the margin sort of reduces it," said Edward Park, deputy chief investment officer, Brooks Macdonald Asset Management.
"The passage of the Hong Kong Human Rights And Democracy Act effectively hangs a cloud over this (U.S.-China) trade agreement."
China-exposed miners and banks were the top decliners among the major European subsectors, down over 1pc each.
However, oil majors Royal Dutch Shell, Total and BP contributed most to the declines on STOXX 600 as oil prices slid for a third session on concerns of oversupply.
German payments company Wirecard dropped 5.1pc after news that auditor EY refused to sign off on the Singapore audit of the company for 2017, citing irregularities.
London's FTSE 100 was led 1pc lower by home improvement retailer Kingfisher's 6.3pc tumble after it reported a worsening fall in underlying sales in the third quarter.
Swiss-listed eyecare company Alcon fell 3.6pc after the firm tightened its profit outlook, boosted projections for the cost of its spinoff from Novartis and announced a $300 million restructuring program.
Data from Refinitiv showed revenue of companies on the STOXX 600 index in this earnings season is seen rising 1.4pc, slightly below a 1.5pc increase forecast a week ago, while earnings is expected to drop 4.7pc.
Sectors considered as safer bets during times of economic uncertainty including food & beverage, healthcare and utilities posted minimal losses.