LONDON (Reuters) – Shares of European carmakers fell on Tuesday as traders reacted to new President Donald Trump promising high tariffs on Canada, Mexico and China, news that stoked jitters about a potential global trade war.
A basket of European auto and parts stocks was the worst-performing sector in Europe, down 1.7% versus a 0.7% decline for the broader STOXX 600.
Trump said in a post on Truth Social that on his first day in office he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China.
“Areas like the auto sector, which has highly integrated supply chains across Mexico-US-Canada-US borders, are very vulnerable,” said Paul Donovan, chief economist at UBS GWM.
Shares of German Volkswagen fell by 2.1%, while Stellantis – the maker of Chrysler, Dodge and Fiat, among others – was the biggest faller with 4.1%.
Italian broker Intermonte said Stellantis would be “the hardest hit” by tariffs on US imports from Mexico, as the group imported 358,000 units in 2023.
“We estimate that each additional 1 percentage point rate could impact pre-tax profits by ~Eu160 million or 1.4% of 2025 expectations,” they said.
About a quarter of Stellantis sales in North America are in Mexico.
French auto parts manufacturer Valeo fell 2.5%, while German luxury brand BMW fell 1.5%. Volvo Car fell more than 3% and Daimler Truck fell 3.4%.
It’s a rapid turnaround for markets, which had welcomed on Monday the appointment of fund manager Scott Bessent as finance minister, a key cabinet position with influence over economic policy and international affairs.
Some investors said Bessent’s appointment was a relief given his career in finance and his understanding of the markets. Some said his appointment could have reduced the likelihood of tough tariffs.
(Reporting by Samuel Indyk and Lucy Raitano; Editing by Amanda Cooper)
