The recent decision by US President Trump to impose new tariffs on several European nations has triggered significant declines in shares of prominent car manufacturers across Europe. The automotive sector faced a downturn as the Stoxx Automobiles and Parts index fell approximately 2% during midday trading on Monday.
How are car manufacturers responding to the tariff news? Major players in the sector, including Volkswagen, BMW, and Mercedes-Benz Group, experienced drops ranging from 2.5% to 3%. Additionally, Porsche’s shares fell over 3%, showing the market's immediate reaction to the tariffs. In Italy, Ferrari's stock saw a decline of about 2.2%, hitting a 52-week low, while Stellantis shares decreased by around 1.8%.
The market's downturn follows the announcement that starting February 1, the US plans to enact a 10% tariff on car imports from several European countries, including the UK, Denmark, and Germany, among others. This tariff will escalate to 25% by June 1, aligning with the US's broader strategy to assert control over Greenland, a self-governing territory of Denmark.
What measures are European leaders considering in response? In light of these developments, the European Union is preparing retaliatory tariffs that could total up to €93 billion if the US proceeds with the initial 10% tariff. The automotive industry, known for its extensive global supply chains and reliance on cross-border manufacturing—especially within North America—faces significant exposure to these tariffs, making it a target for financial scrutiny.