European Car Stocks Plummet Amid Escalating US-Canada Trade Tensions

Brussels: Shares in European carmakers took a significant hit on Tuesday, as trade tensions between the United States and Canada intensified. The auto sector experienced a decline of 2.7%, with Stellantis suffering the most substantial drop, as its shares fell by 6%.

According to Ansa News Agency, the tensions stem from the announcement by US President Donald Trump, who declared a doubling of tariffs on Canadian steel and aluminum, raising them from 25% to 50%. This decision came in response to Ontario’s recent imposition of a 25% surcharge on electricity exports to several US states. The ramifications were felt across the automotive industry with Volkswagen dropping by 3.2% during afternoon trading, followed by Mercedes at 2.5%, Porsche at 2.8%, BMW at 1.9%, and Ferrari at 1.6%. Renault, however, was less impacted, with its shares only down by 0.4%.

Stellantis, alongside other carmakers like Volkswagen that have major production operations in countries affected by these tariffs, are currently benefiting from a temporary tariff reprieve under the United States-Mexico Canada Agreement (USMCA). Despite this, the escalation of trade tensions poses a significant threat. President Trump issued a stark warning on his Truth social media platform, stating that if Canada does not remove what he described as “egregious, long time tariffs,” he would substantially increase tariffs on cars coming into the U.S. from Canada by April 2nd. He warned that this move could effectively “permanently shut down the automobile manufacturing business in Canada.”