Autos fall on Trump’s Greenland tariff threat
The logo of German automaker Volkswagen can be seen on a vehicle in front of a VW dealership.
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Shares of some of Europe’s largest automakers fell sharply on Monday morning after US President Donald Trump promised to impose tariffs on several European countries over Greenland.
Europe’s Stoxx Auto & Parts index was trading down 2% at 08:41 London time (03:41).
of Germany volkswagen, bmwAnd Mercedes-Benz Group Milan-listed shares were trading between 2.6% and 4.4% lower in early trading. Ferrari dropped to around 2 percent.
Shares listed in Milan StellantisThe company, which owns brands such as Jeep, Dodge, Fiat, Chrysler and Peugeot, was last seen 2.1% lower.
The moves come on the heels of Trump’s pledge on Saturday to impose 10 percent tariffs on Britain, Denmark, Norway, Sweden, France, Germany, the Netherlands and Finland by Feb. 1, accelerating his push to make Greenland, a self-governing territory of Denmark, part of the United States.
Trump said that the tax applied to these countries will increase to 25 percent as of June 1.
European political leaders are expected to hold urgent talks in the coming days as they consider their response.
It is widely accepted that the automotive industry is seriously vulnerable to tariffs, especially given the high level of globalization of supply chains and heavy reliance on manufacturing operations in North America.
“Our view, ultimately, is that tariffs are a blunt tool that rarely really works for any length of time. Mostly because it’s such a global economy these days, and even if people can’t talk about it, they find a way around it,” Rob Brewis, director and chief investment officer at Aubrey Capital Management, told CNBC’s “Europe Early Edition” on Monday.
“Obviously, the tariffs caused a huge stir in April last year, but since then I think their impact has been diminishing over time and with repeated use,” he added.
When asked which European sectors were most exposed to Trump’s latest tariff threats, Brewis singled out the automotive industry.
“My focus is more on emerging markets, so I spend less time on Europe, but I think this is not helpful for sectors like the auto industry, which are already facing major threats from Chinese players,” he added.
