Europe Rushes to Block 30% U.S. Tariffs as Markets Tumble

Written by Christoph Steitz and Emma Rumney

FRANKFURT/LONDON () - European companies urged trade officials to intensify their attempts to reach an agreement with Washington following U.S. President Donald Trump's warning of a 30% tax on EU goods starting in August, without indicating potential exceptions for vehicles or alcoholic beverages.

On Saturday, Trump announced his intention to apply increased tax rates on goods coming from Mexico and the European Union starting August 1, increasing pressure on Brussels to quickly seek an agreement in order to prevent significant economic damage to the region.

The action caused a decline in European auto and alcoholic beverage stocks on Monday, with local food companies stating that the 30% tax, if implemented, would be "devastating."

"An increasing tariff dispute with the U.S. presents a significant risk for numerous German businesses," stated Volker Treier, who leads trade affairs at Germany's DIHK business association, calling on officials to swiftly finalize an agreement.

Intense discussions are required to prevent the breakdown of transatlantic commerce. A unified Europe is necessary to properly protect its financial advantages.

Car manufacturers saw their stock prices decline, as Volkswagen, Stellants (owner of Fiat and Jeep), Renault, BMW, Mercedes-Benz, and Porsche each fell by approximately 1-2 percent.

The proposed 30% tax is "distinct from every industry-specific tax," Trump stated in a message to European Commission head Ursula von der Leyen, suggesting that the current 27.5% charge on vehicles, which has been active since April, will remain in place.

UNCERTAINTY

The introduction of potential new tariffs increases uncertainty within one of the globe's largest trading relationships, which saw approximately $975.9 billion in combined merchandise trade last year, according to USTR statistics.

Mercedes-Benz stated that reaching an accord was "essential for the long-term financial prosperity of both European and American markets," emphasizing that all stakeholders should "collaborate closely and swiftly toward establishing a trade deal."

Stocks of other leading European companies with ties to the U.S. also declined significantly.

The company behind Jameson whiskey, Pernod Ricard, fell by 1.5%, whereas the cognac producer Remy Cointreau dropped more than 4%. In contrast, competitor Diageo saw an increase of over 0.5%, as sales of Canadian whisky and Mexican tequila support its operations in the U.S.

The French luxury giant LVMH fell by 1.5%, whereas consumer products companies such as Nestle, Procter & Gamble, and Reckitt Benckiser experienced declines of under 1%.

"The main issue with today’s tariff policy is the absence of a consistent and reliable tariff structure," stated Pal Skirta, an analyst from Metzler Equities, who noted that this uncertainty makes business planning and operations "considerably more complicated" and expensive.

(Reported by Christoph Steitz, Amir Orusov, Ilona Wissenbach, and Emma Rumney; Written by Adam Jourdan; Edited by Miranda Murray, Kirsten Donovan, Louise Heavens, and Bernadette Baum)