Tariff tensions rattle European auto stocks

President Trump’s response to a lack of progress in trade talks with the European Union is reverberating through the automobile sector as shares of carmakers Ferrari (NYSE:RACE), Stellantis (NYSE:STLA), Mercedes-Benz (OTCPK:MBGAF) (OTCPK:MBGYY), Volkswagen (OTCPK:VWAGY) (OTCPK:VLKAF) (OTCPK:VWAPY), Porsche (OTCPK:POAHY), and BMW (OTC:BMWKY) (OTCPK:BAMXF) underperform their U.S. rivals.

On Friday, Trump threatened a 50% tariff on goods manufactured in the EU amid frustrations with the difficulty in hammering out a deal.

“Our discussions with them are going nowhere!” Trump said in a post on Truth Social, echoed by Treasury Secretary Scott Bessent.

“EU proposals have not been of the same quality that we’ve seen from our other important trading partners,” Bessent said, adding that the EU “has a collective action problem.”

Europe’s major bourses all retreated on the development, dragging down shares of the major automakers, with Mercedes-Benz (OTCPK:MBGAF)(OTCPK:MBGYY) taking the brunt on Germany’s DAX. While the company sells more than a third of its vehicles in China, the U.S. follows with a 16% share, and Germany at 10%. Mercedes-Benz shares shed 4% on Friday.

Stellantis (NYSE:STLA) stands out as the most diversified among EU-domiciled auto manufacturers with facilities in the U.S., Canada, France, Italy, Germany, and the UK, along with a presence in Brazil. That didn’t stop investors from bailing out of the stock, driving STLA down 3.7% versus a more modest decline of less than 1% in shares of U.S. rivals General Motors (GM) and Ford (F).

Volkswagen (OTCPK:VWAGY)(OTCPK:VLKAF)(OTCPK:VWAPY) is almost as diversified as Stellantis (NYSE:STLA) with its largest plant at its Wolfsburg, Germany headquarters. The company also maintains a significant manufacturing presence in the U.S., with production of the Passat, Atlas, and all-electric ID.4 in Chattanooga, Tennessee. Unfortunately, because of soft demand for EVs, Volkswagen has reduced shifts and scaled back production. The stock closed 3% lower in Germany, setting a one-month low.