European Shares Plunge Amid Auto Tariff Tensions

European stock markets dropped to a two-week low due to fears of a trade war sparked by U.S. plans to impose a 25% tariff on imported vehicles and auto parts. Key automakers like Volkswagen and Stellantis experienced significant stock declines. Market caution prevails amid these tense trade relations.

European stocks fell sharply on Thursday, with auto shares leading the decline, following announcement of new U.S. tariffs on vehicles. President Trump's proposed 25% import duties on foreign cars and parts have raised concerns about a potential trade war impacting global growth.

The pan-European STOXX 600 dropped 0.8% by midday, erasing nearly 10 billion euros in market value. Germany's DAX index, reflecting one of the largest auto exporters to the U.S., decreased by 1%. Volkswagen and Stellantis were among the top decliners, losing 2.1% and 4.1%, respectively.

With the STOXX 600 autos sector down more than 2.2%, the market braces for potential losses. German Economy Minister Robert Habeck urges a firm response, while analysts highlight that ongoing tariff uncertainties are likely to dictate market trends. Despite apprehension, European markets are still anticipating a strong quarterly performance.

(With inputs from agencies.)