German carmaker stocks drop on Trump's tariff threat

FRANKFURT/LONDON () - Stocks of German automakers declined on Monday following warnings from U.S. President Donald Trump about imposing a 30% tax on European Union goods starting August 1, without specifying any exceptions for vehicles, which continue to face a 27.5% levy.

On Saturday, Trump announced his intention to implement a 30% tax on goods coming from Mexico and the European Union starting in August, intensifying demands 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 vehicle duties that have been active since April will remain in place.

Volkswagen, BMW, Mercedes-Benz, and Porsche stocks fell between 1.2% and 2% by 0737 GMT.

"From my perspective, the main issue with today's tariff policy is the absence of a consistent and reliable tariff structure," noted Pal Skirta, an analyst with Metzler Equities.

Without well-defined long-term guidelines, managing plans and operations in highly international industries—like the automobile sector—becomes much more complicated, not to mention the extra financial strain caused by the tariffs themselves.

Stocks of European spirit manufacturers, some of whom depend on the American market, showed varied performance.

Diageo, whose U.S. operations are fueled by sales of Canadian whiskey and Mexican tequila, saw an increase of 1%.

A competitor of Pernod Ricard, the company behind Jameson Irish whiskey, fell by 1%, whereas Remy Cointreau, a producer of cognac, declined by 2.4%.

(Produced by Christoph Steitz, Amir Orusov, and Emma Rumney, Edited by Miranda Murray, Kirsten Donovan)