European car makers shares fell today, as traders reacted to President-elect Donald Trump pledging big tariffs on Canada, Mexico and China, news that fueled jitters over a potential global trade war.
A basket of European autos and parts stocks was the worst performing sector in Europe, down 1.7% compared to a 0.7% fall for the broader STOXX 600 index.
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 the Mexico-US and Canada-US borders, are very vulnerable," said UBS GWM chief economist Paul Donovan.
Shares in Germany's Volkswagen were down 2.1%, while Stellantis - the maker of Chrysler, Dodge and Fiat, among other major brands - was the biggest faller, off 4.1%.
Italian broker Intermonte said Stellantis would be "hardest hit" by tariffs on US imports from Mexico as the group imported 358,000 units in 2023.
About a quarter of Stellantis' North American sales are made in Mexico.
French car parts maker Valeo dropped 2.5%, while German luxury brand BMW fell 1.5%. Volvo Car was down over 3% and Daimler Truck fell 3.4%.
It is a quick reversal for markets, which had yesterday welcomed the nomination of fund manager Scott Bessent as Treasury secretary, a key cabinet position with influence over economic policy and international affairs.
Some investors said Bessent's nomination was a relief, given his career in finance and understanding of markets, with some saying his appointment could have reduced the chance of severe tariffs.
