FRANKFURT: European shares ended at their lowest in nearly two weeks on Thursday, dragged by auto stocks after US President Donald Trump announced 25% import tariffs on all vehicles and foreign-made auto parts, exacerbating fears of a global slowdown.
The pan-European STOXX 600 closed 0.5% lower, having dipped as much as 1.1%. The blue-chip index for Germany , among the biggest suppliers of car and car parts to the United States, fell 0.7%.
Volkswagen, Europe’s top carmaker, fell 1.5%. Chrysler-parent Stellantis slumped 4.2%, BMW fell 2.5% and Porsche slid 2.6%.
French automotive supplier Valeo sank 7.8%, saying it would not be able to absorb recent tariffs and would have to raise prices.
The STOXX 600 autos sector slumped 1%, erasing all of its gains so far this year.
The new levies, set to take effect on April 3, could increase the cost of an average US vehicle by thousands of dollars, given the intertwined supply chains across North America.
The announcement compounded investors’ worries as they also braced for Trump’s reciprocal tariffs on trade partners, due on April 2.
“The US tariff story is not only a negative for the global economy, but for European equities,” said Roland Kaloyan, European equity strategist at Societe Generale.
Washington has told the European Union it should not expect any trade negotiations before the United States has imposed more tariffs on the bloc next week, EU diplomats said.
The constant back-and-forth around US trade policies dented investor sentiment around the globe.
But the STOXX 600 index is still set for its strongest quarterly performance in two years, on the back of hopes of an economic boost from Germany’s historic fiscal spending plans and a rotation out of US stocks.
The basic resources index led Thursday’s losses, tumbling 1.8%, tracking a drop in copper prices.
But real estate stocks surged 2.1% as shorter-dated euro zone bond yields dipped following Trump’s auto tariff announcement.
Germany’s 2-year bond yield was down about 5 basis points to 2.069%, its lowest since March 3.
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