European Auto Stocks Tumble Amid U.S. Tariff Threats

European shares hit a two-week low, led by a decline in auto stocks due to U.S. President Trump's proposed 25% tariffs on vehicles. This spurred fears of a trade war potentially hampering global growth, affecting major carmakers in Germany and beyond.

European shares plummeted to a two-week low on Thursday, primarily driven by a sharp decline in auto stocks. This downturn was triggered by U.S. President Donald Trump's plans to implement 25% import tariffs on vehicles and foreign-made auto parts, heightening fears of a trade war that could negatively impact global economic growth.

The pan-European STOXX 600 index registered a decrease of 0.8% by 0847 GMT, with Germany's benchmark index, a leading supplier of cars and parts to the U.S., falling by 1.1%. Volkswagen, heavily reliant on Mexican supplies and without U.S. production facilities for its Audi and Porsche brands, saw its shares drop by 3.2%, while Stellantis, BMW, and Porsche also experienced significant declines.

The broader STOXX 600 autos sector slumped by more than 3.1%, effectively wiping out its gains for the year. The potential tariffs could increase the cost of U.S. vehicles significantly, impacting manufacturing operations intertwined with Canada, Mexico, and the U.S. Germany's economic and automotive authorities criticized the tariffs, urging swift negotiations to prevent a deepening trade conflict.

(With inputs from agencies.)