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On Thursday, car manufacturers took the lead in pulling European stocks down after U.S. President Donald Trump threatened to impose hefty tariffs of 25 percent on EU goods.
The Stoxx Europe 600 index saw a drop of 0.6 percent in early trading, while Germany’s Dax index, which is home to several major exporters, decreased by 1 percent.
President Trump issued this warning on Wednesday during his inaugural cabinet meeting since taking office last month, expressing that the EU was established to undermine the United States.
“We’ve decided, and an announcement is coming soon,” Trump responded when questioned about the looming EU tariffs. “Broadly, we’re looking at 25 percent, covering cars and other items.”
In response, major German automakers like Volkswagen and Mercedes-Benz experienced a 2 percent decline, with Porsche slipping by 2.3 percent. Meanwhile, Stellantis, listed in Paris, also fell by 2.3 percent.
This year, European stocks have seen gains partly due to the region’s avoidance of a full-blown trade war scenario. However, “The recent headlines about tariffs serve as a wake-up call for the auto sector and the wider EU market,” commented Emmanuel Cau, a Barclays analyst.
