European Stocks Plunge as Trump Tariffs Hit Automotive Sector

European stocks opened sharply lower on Thursday, with the automotive sector leading the decline. Stellantis, the manufacturer of Jeep, saw its stock price drop by 5.2%. This significant drop was a direct response to the new tariffs announced by former U.S. President Donald Trump on Wednesday. The tariffs, which will take effect on April 2, impose a 25% tax on all non-U.S.-made vehicles. This move has sent shockwaves through the global automotive industry, particularly affecting European manufacturers who rely heavily on exports to the U.S. market.

The Stoxx 600 index, a benchmark for European stocks, fell by approximately 1% shortly after the market opened. The Stoxx Europe Automobile Index experienced an even steeper decline, plummeting by 3.3% during early trading. Other major European automakers also felt the impact, with Mercedes-Benz's stock price dropping by 5% and BMW's by 4.4%. The ripple effects of Trump's tariffs were not limited to Europe; Asian automotive manufacturers also saw their stock prices fall overnight as investors weighed the potential consequences of the new trade barriers.

Trump's announcement has sparked a wave of reactions from both European and global leaders. White House aide Will Shafer clarified that the new tariffs would apply to "foreign-made cars and light trucks." Trump himself took to his "Truth Social" platform to threaten even higher tariffs if the European Union and Canada were to collaborate in a way that causes economic harm to the U.S. This escalation in trade tensions has raised concerns about the potential for a broader trade war, which could have far-reaching implications for the global economy.

In response to Trump's tariffs, European Union Commission President Ursula von der Leyen expressed deep regret over the new measures. She stated that the EU would continue to seek a resolution through negotiations while safeguarding its economic interests. This stance reflects the EU's commitment to maintaining open trade channels while protecting its industries from potential economic damage. The situation remains fluid, with investors and industry leaders closely monitoring developments as the April 2 deadline approaches.