On Feb 3, shares in major European carmakers took a hit as U.S. President Donald Trump announced tariffs on goods from Mexico, Canada, and China. Concerns rose about potential duties on EU imports. Stellantis and Volkswagen, with significant presence in Mexico, saw a 6.8% and 5.6% drop, respectively. Volvo Cars fell by 6.5%, while Mercedes Benz, BMW, and Porsche were down between 3.6% and 4.3% by 0921 GMT. French car parts supplier Valeo slid by 7.4%.
The European automobiles and parts index fell by 3.7% to a two-week low, the most among other sectoral indices on Europe's STOXX 600, which slipped 1.4%. Analysts are concerned that tariffs on Mexico could have a more substantial impact on European carmakers and suppliers than direct EU tariffs.
Analysts at investment bank Stifel noted that approximately 8 billion euros ($8.2 billion) of VW's revenues would be affected by tariffs, along with around 16 billion euros of Stellantis revenues,
The analysts estimated that the full impact of tariffs could reach about 12% of Volkswagen's operating income by 2025 and 40% for Stellantis.
Volkswagen announced plans to steer clear of trade conflicts. JPMorgan analysts anticipate companies will pledge to prioritize jobs and vehicle production in the U.S. over Mexico and Canada to the U.S. government.
The tariffs are set to come into effect at 0501 GMT on Tuesday. ($1 = 0.9778 euros)