Australian shares closed lower on Monday as reports that President Trump is considering 15% to 20% tariffs on European Union products dampened investor sentiment.

The S&P/ASX 200 fell 1% or 89 points to close at 8,668.2.

EU officials are likely to meet to draft a response plan for a possible no-deal scenario with President Trump, Bloomberg reported.

"Markets continue to mull over the landing point of tariffs," said Jameson Coombs, Economist at Westpac (ASX:WBC, NZE:WBC).

On the domestic front, Australia's household spending edged up modestly as the labor market cooled slowly, business confidence strengthened, and inflation remained close to target, with the Reserve Bank of Australia likely to lower rates further, according to National Australia Bank's (ASX:NAB) report on July 18.

South32 (ASX:S32) said that payable copper-equivalent production from the Sierra Gorda project in Chile came in at 21,900 tonnes in the June quarter, up 19% from the 18,400 tonnes in the prior-year quarter. Shares of the company rose 5% at market close.

Seek (ASX:SEK) is facing a lawsuit filed by Employment Hero with the Federal Court of Australia on July 18 for its alleged misuse of market power, the court's website showed.

Lastly, AMP (ASX:AMP) said that assets under management for its platforms business increased 5.6% sequentially to AU$83.2 billion in the second quarter from AU$78.8 billion in the first quarter, reflecting investment market movements. Shares of the company rose 10% at market close.