European Auto Stocks Tumble Amid Trump Tariffs

European carmakers are grappling with the implications of President Trump's announcement of a 25% tariff on imported cars and components, effective April 2. The tariffs have led to significant declines in the stock prices of major automakers, including Mercedes-Benz and BMW, with analysts predicting a 20%-30% negative impact on their fair value estimates should the tariffs be permanent. The European Commission is preparing for potential reciprocal tariffs in response, highlighting the adverse effects on both businesses and consumers. Amid these developments, automakers are faced with rising costs and a challenging market environment, as demand for vehicles remains soft due to economic pressures. Companies like Ferrari have already announced price increases, but many are hesitant to act further for fear of retaliation from the U.S. government. The uncertainty surrounding these tariffs is expected to prolong market volatility for European auto stocks in the near term.