European Shares Tumble as Auto Stocks Hit by New Tariff Threats

European shares dropped following U.S. President Trump's proposal of 25% tariffs on European auto imports. The STOXX 600 index fell 0.4%, impacting carmakers like Stellantis, BMW, and Porsche. The market's reaction was seen as temporary, with expectations of trade negotiations ahead.

European shares experienced a notable decline on Thursday, triggered by a broader selloff primarily targeting the automobile sector. This came after U.S. President Donald Trump announced plans to impose a 25% "reciprocal" tariff on automobiles and other goods imported from the European Union.

The pan-European STOXX 600 index dropped 0.4% by 0933 GMT, following a record high close the day before. Major European carmakers were among the hardest hit, with the automakers and components makers index plunging over 3%. Stellantis led the decline with a 3% fall, while BMW and Porsche were down 2.6% and 2.5%, respectively.

Market analysts like Giles Coghlan from GCFX Ltd have described the reaction as "kneejerk," suggesting the tariffs act more as a negotiation tactic than a punitive measure. Additionally, Trump hinted at not implementing new tariffs on Mexican and Canadian imports until April 2, while the European Commission promised a firm response to any unfair trade barriers.