Europe Shares Slide on Threat of 30% Trump Tariff

Written by Christoph Steitz and Emma Rumney

FRANKFURT/LONDON () - Europe Inc was contemplating and attempting to process U.S. President Donald Trump's most recent trade action on Monday following his warning of a 30% tax on European Union imports starting in August, without any indication of potential exceptions for industries such as automobiles or alcoholic beverages.

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

On Saturday, Trump stated his intention to implement a 30% tax on goods coming from Mexico and the European Union starting August 1, intensifying pressure on Brussels to seek an agreement and prevent significant economic damage to the region.

A 30% tax is applied "in addition to all industry-specific taxes," Trump stated in a message to European Commission President Ursula von der Leyen, suggesting that the existing 27.5% levy on vehicles, which has been active since April, will remain in place.

The statement—amid hopes in Brussels for a more favorable agreement—is introducing further unpredictability into one of the globe's largest trading relationships, which saw $975.9 billion in bilateral merchandise trade last year, according to USTR statistics.

"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.

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

Pernod Ricard, the company behind Jameson whiskey, fell by 1.5%, whereas Remy Cointreau, a producer of cognac, declined approximately 4%. In contrast, competitor Diageo saw an increase of more than 0.5%, as sales of Canadian whisky and Mexican tequila fuel its operations in the United States.

The French high-end fashion giant LVMH fell by 1.5%, whereas consumer products companies such as Nestle, Procter & Gamble, and Reckitt Benckiser saw declines of under 1%.

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