European carmakers hit hard as Trump announces 25 pct tariffs on imported cars

Shares in European automobile manufacturers fell sharply Thursday after US President Donald Trump announced a permanent 25 percent tariff on cars and auto parts made outside the United States, set to take effect next week.

Investors reacted swiftly to the announcement, leading to a broad sell-off in European automotive stocks. The Stoxx Europe 600 index for carmakers and auto parts manufacturers dropped 1.6 percent on the day, extending a year-long decline of nearly 25 percent, as the sector was already under pressure due to weakening demand, rising fuel costs, and the transition to electric vehicles.

Among individual manufacturers, Stellantis, the Italian-French auto giant, suffered the largest decline, falling 4.5 percent. Volkswagen, Europe's largest carmaker, lost 1.5 percent, while Mercedes (-2.6 percent), BMW (-2.4 percent), and Porsche (-3.4 percent) also saw significant drops. Renault was the only major carmaker to buck the trend, closing 0.6 percent higher after recovering from early losses.

The market turbulence followed Trump's late-Wednesday tariffs announcement, and analysts attributed the sharp declines in carmaker stocks directly to investor concerns over the impact of the tariffs on European exports to the US.

European leaders have been engaged in talks with Washington in an effort to delay, reduce, or reverse the tariffs, but so far, no agreement has been reached.

Italian Prime Minister Giorgia Meloni has urged caution, warning against escalating trade tensions by imposing retaliatory European tariffs on US goods. However, French President Emmanuel Macron and German Economy Minister Robert Habeck have called for a strong European Union response to counter the new US measures.

The EU had initially planned to introduce its own tariffs on US imports starting April 1, but last week, European leaders voted to delay the measures by at least two weeks.

Despite the sell-off in auto stocks, broader European stock markets showed mixed performance on Thursday. Italy's FTSE MIB index in Milan was flat, while Germany's DAX in Frankfurt fell 0.7 percent, and France's CAC 40 in Paris declined 0.6 percent.