The logo of the German car manufacturer Volkswagen can be seen on a vehicle in front of a VW dealership.
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Shares of some of Europe’s biggest carmakers fell sharply on Monday morning, following U.S. President Donald Trump’s pledge to impose tariffs on several European countries over Greenland.
Europe’s Stoxx Automobiles and Parts index traded 2% lower at around 1:02 p.m. London time (8:02 a.m. ET), paring losses from earlier in the session.
Germany’s Volkswagen, BMW, and Mercedes-Benz Group stood between 2.5% to 3% lower, while Milan-listed shares of Ferrari dipped around 2.2%, notching a 52-week low. Germany’s Porsche fell 3.2% on the news.
Milan-listed shares of Stellantis, which owns household names including Jeep, Dodge, Fiat, Chrysler, and Peugeot, were last seen 1.8% lower.
The moves come shortly after Trump on Saturday pledged to impose 10% tariffs on the U.K., Denmark, Norway, Sweden, France, Germany, the Netherlands, and Finland by Feb. 1, ramping up his push to make Greenland, a self-governing Danish territory, part of the United States.
The levy on these countries will rise to 25% from June 1, Trump said.
European political leaders are expected to hold emergency talks over the coming days as they consider their response.
The automotive sector is widely regarded as acutely vulnerable to levies, particularly given the high globalization of supply chains and the heavy reliance on manufacturing operations across North America.
“Our view is that ultimately tariffs are a blunt tool that seldom really works for any sort of length of time. Mostly because it’s a very global economy these days and people find a way around it even if they can’t talk themselves out of them,” Rob Brewis, director and investment manager at Aubrey Capital Management, told CNBC’s “Europe Early Edition” on Monday.
“Clearly, the tariffs created a huge stir back in April last year but ever since then, their impact diminishes with time and with repeated use, I guess,” he added.
Asked which European sectors were likely 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 it’s unhelpful for sectors like the car sector, which is already facing huge threats from the Chinese players,” he added.