German Car Companies Stocks Plummet After Trump Threatens to Impose New Tariffs

Major German car manufacturers witnessed a significant decline on Monday, July 14, following President Donald Trump's threat to impose a 30% tariff on imports from the European Union starting August 1, excluding the automotive sector which is still subject to a 27.5% tariff.

The threat came in a letter Trump sent to European Commission President Ursula von der Leyen, stating that the new tariffs would be applied "separately from all sectoral duties," meaning that the tariffs imposed on European cars since July would remain unchanged.

Trump had also announced on Saturday his intention to apply these tariffs on imports from Mexico and the European Union, aiming to increase pressure on Brussels to expedite negotiations and avoid potential economic repercussions.

The American threat had a negative impact on the performance of German car company stocks, with Volkswagen, BMW, Mercedes-Benz, and Porsche stocks declining between 1.2% and 2%.

Paul Schickert, market analyst at Metzler Equities, commented: "In my opinion, the biggest problem with the current tariff policy is the lack of a stable and predictable framework."

He added: "Without clear long-term rules, planning and operational management become significantly more complicated for globally-oriented sectors like the automotive industry, not to mention the additional financial burden imposed by the tariffs themselves."

In a related context, European alcoholic beverage companies' stocks showed mixed performance, with Diageo, relying on Canadian whiskey and Mexican tequila sales in the US market, rising by 1%. In contrast, Pernod Ricard, producer of Irish whiskey Jameson, saw a 1% decline, while Remy Cointreau, specializing in cognac, dropped by 2.4%.

This move comes amid escalating trade tensions between Washington and the European Union, adding to the uncertainty in global markets, especially for cross-border companies.