London. Shares of US and European automakers fell on Tuesday, as traders reacted to President-elect Donald Trump’s promise to impose large tariffs on Canada, Mexico and China, stoking nervousness about a possible global trade war.
The automobiles and parts sector was the worst performer in Europe, down 1.4 percent versus a 0.3 percent drop in the STOXX 600.
Trump said in a post on Truth Social that on his first day in office he would impose a 25 percent tariff on all products from Mexico and Canada, and an additional 10 percent 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.
The shares of the German Volkswagen fell 1.6 percent, while those of Stellantis – manufacturer of Chrysler, Dodge and Fiat, among other major brands – fell 4.3 percent.
The American automakers General Motors and Ford Motor fell 4.1 percent and 2.1 respectively. Shares of Toyota Motor, listed in the United States, fell 1.2 percent.
The Italian brokerage Intermonte said that Stellantis would be “the most affected” by tariffs on US imports from Mexico, since the group imported 358 thousand units in 2023.
“We estimate that each additional 1pp on the tariff could impact pre-tax profit by ~Eu160mn or 1.4 percent of expectations for 2025,” they said.
About a quarter of the vehicles sold in North America by Stellantis are manufactured in Mexico.
In a note published last week, Evercore ISI said that each 10 percent tariff on Mexico poses a 20 percent risk to GM’s earnings per share and a 10 percent risk to Ford’s.
Shares of French auto parts maker Valeo fell 1.2 percent, while German luxury brand BMW fell 0.8 percent. Volvo Car lost 1.8 percent and Daimler Truck lost 3.8 percent.
It is a swift setback for markets, which on Monday had welcomed the appointment 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 appointment was a relief, given his career in finance and understanding of markets, and some claimed his appointment could have reduced the possibility of harsh tariffs.
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