European auto stocks plunge as U.S. tariffs on Mexico, Canada take effect

Shares in European carmakers and automotive suppliers fell sharply on Tuesday after the U.S. implemented a 25% tariff on imports from Mexico, a key production hub for the automotive sector supplying the American market.

The STOXX Europe 600 Automobiles and Parts index dropped 3.8%, reflecting widespread concern among companies such as Volkswagen, Stellantis, and BMW, all of which operate manufacturing sites in Mexico.

According to data from Mexico's automotive industry association, Stellantis and the Volkswagen Group are among the largest European exporters of light vehicles to North America from Mexico. German supplier Continental, which provided a cautious outlook for 2025, indicated that it would review the tariff’s impact on its facilities in both Mexico and Canada before making further decisions. Continental’s shares were down 8.4% following the announcement.

The tariffs have been particularly challenging for Germany's export-oriented carmakers, many of which have built up capacity in Mexico over the years to complement their major production hubs in the United States. German Economy Minister Robert Habeck commented on the measures, stating, "The EU will not be pushed around. If President Trump imposes the announced tariffs on EU products, we will react with unity and self-confidence."

As European policymakers and industry leaders assess the economic fallout, the new tariffs have intensified calls for open trade policies that support Europe's industrial base. The developments underscore the growing tensions in transatlantic trade relations and highlight the potential long-term implications for global automotive supply chains.