European Carmakers Hit by Market Jitters Over Potential U.S. Tariffs

Shares of major European carmakers took a sharp hit today amid rising uncertainty over potential new tariffs following Donald Trump’s assumption of the U.S. presidency. Although Trump refrained from immediately imposing the tariffs he had previously promised, he indicated that he is considering a 25% duty on imports from Canada and Mexico starting February 1, citing concerns over illegal immigration and fentanyl trafficking into the U.S.

This news sent shockwaves through European automakers with operations in Mexico, such as Stellantis and Volkswagen, which produce vehicles for the U.S. market. By 0813 GMT, Stellantis saw its shares drop around 2%, while the broader European auto sector fell about 1%, underperforming a relatively stable market.

Germany’s automotive giants, including Volkswagen, BMW, and Mercedes, experienced share declines ranging from 1.2% to 1.6%.

The tariff threat also weighed heavily on Spanish bank BBVA, which has significant exposure to the Mexican market. BBVA’s shares slipped 1.6% in Madrid as the Mexican peso weakened by over 1% against the dollar. Highlighting potential risks for European exporters, Trump floated the idea of universal tariffs but mentioned that the U.S. is not yet ready to take that step.