European carmakers' shares fall amid Trump’s tariffs

February 03, 2025 (MLN): Shares in some of the biggest European carmakers plunged on Monday after U.S. President Donald Trump imposed 25% tariffs on goods from Mexico and Canada and 10% on imports from China, raising concern over possible duties on EU imports.

Stellantis and Volkswagen, which have major operations in Mexico and are particularly vulnerable to tariffs, were down 6.8% and 5.6% respectively.

Volvo Cars was down 6.5% while Mercedes Benz, BMW and Porsche lost between 3.6% and 4.3% by 0921 GMT.

French car parts supplier Valeo, meanwhile, was down 7.4%.

Europe's automobiles and parts index retreated by 3.7% to more than two-week lows, the most among other sectoral indices on Europe's STOXX 600, which slipped by 1.4%.

Analysts fear the tariffs on Mexico could be more damaging for European carmakers and their suppliers than any direct tariffs on EU goods, as Reuters reported.

"We believe around 8 billion euros ($8.2bn) of VW's revenues are impacted by tariffs and around 16 billion euros of Stellantis revenues," analysts at investment bank Stifel wrote in a note.

They estimated the full impact of tariffs at about 12% of Volkswagen's operating income in 2025 and 40% at Stellantis.

Volkswagen said on Sunday that it was counting on talks to avoid trade conflict.

JPMorgan analysts said in a note they expect companies to give commitments to the U.S. government this week on jobs and vehicle production in the U.S. rather than Mexico and Canada.

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