EU carmakers slide on new US tariff hike

European automotive shares fell after President Donald Trump announced plans to raise tariffs on cars and trucks imported from the European Union to 25%. The increase comes from a previously agreed level of 15% and is tied by the US administration to what it describes as the EU’s failure to comply with a trade deal.

The announcement focused investor attention on the risk of a renewed trade dispute between the United States and the European Union, with the auto industry at the center. The move immediately weighed on stock prices for major European carmakers and parts suppliers.

Shares in leading German auto companies were among the most affected. Continental (CONd) dropped 4%, making it one of the steepest fallers in the sector. Porsche (PAH3d) and Mercedes (MBGd) each declined by more than 1% in the session following the tariff news.

BMW (BMWd) and Volkswagen (VOW3d) also retreated, falling roughly 1.3% and 1%, respectively. The pullback across these large, index-heavy stocks contributed to broader weakness in European equity markets, particularly in sectors with high exposure to US demand for vehicles.

The pan-European STOXX Europe 600 Automobiles & Parts Index declined 0.7% after the tariff announcement. This drop made it the worst-performing sector index in the region during the trading session, underscoring the concentrated impact of the policy move on carmakers and their suppliers.

The index’s underperformance reflected concerns that higher US tariffs could hurt export competitiveness and margins for European manufacturers, especially those with significant US sales or production chains linked to transatlantic trade.

The European Commission responded by stating it would keep its options open regarding possible actions against the US tariffs. Officials signaled that potential retaliatory measures remain under consideration, without specifying particular steps or a timetable.

The Commission’s stance highlighted the possibility of further escalation in trade measures between the two sides. Market participants monitored the evolving policy signals amid uncertainty over how negotiations or countermeasures might affect the automotive industry.

News of the higher US tariffs came as European markets were already poised to open lower, according to indications from futures and pre-market commentary. The renewed focus on trade risk added to the pressure on cyclical sectors, with autos bearing the brunt of the reaction.

Coverage from major financial outlets noted that the tariff threat was a key driver behind the sector’s decline and the broader weakness across European stocks. The episode reinforced the sensitivity of regional equity markets to changes in US trade policy, particularly where export-driven industries are involved.