Trump Starts to Swing the Tariff 'Big Stick' and European Auto Stocks Are First
1min read Smartec Finance app noticed European carmakers' shares fell on Tuesday as traders reacted to President-elect Trump's promise to impose high tariffs on Canada, Mexico and others, heightening fears of a potential global trade war.
The European auto and parts basket was the worst performing sector, down 1.7%, while the Stoxx 600 index fell 0.7%.
Trump said on social media he would impose a 25% tariff on all products from Mexico and Canada on his first day in office.
"Industries like autos, which are highly integrated along the US-Mexico and US-Canada borders, are very vulnerable," said Paul Donovan, chief economist at UBS Global Research.
Shares in Volkswagen fell 2.1%, while Stellantis dropped 4.1%, the most.
Intermonte, an Italian brokerage, said Stellantis would be "most affected" by US tariffs on Mexican imports, as the group imported 358,000 vehicles in 2023.
"We estimate that every 1 percentage point increase in tariffs could impact pre-tax profit by 160mn euros, equivalent to 1.4% of 2025 expectations," they said.
Stellantis generated about a quarter of its North American sales in Mexico.
German car parts maker Visteon fell 2.5%, while BMW, the German luxury brand, dropped 1.5%. Volvo Cars fell more than 3%, and Daimler Trucks 3.4%.
It was a quick reversal of sentiment. On Monday, markets welcomed the nomination of Scott Bessent, a fund manager, as Treasury secretary, a key cabinet post with influence over economic policy and international affairs.
Some investors said Bessent's nomination, given his financial career and knowledge of the markets, was a relief, while others said it could lower the chances of tough tariffs.