The decision of U.S. President Donald Trump to impose new tariffs on Mexican and Canadian imports and Chinese products caused major European automaker stock prices to plummet on the Monday market session. European car manufacturers now face greater uncertainty about acquiring similar trade restrictions in the future.  

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Stellantis and Volkswagen faced substantial impact because their facilities maintain large operations throughout Mexico. The stock value of Stellantis fell by 6.8% and Volkswagen lost 5.6% of its market value. The stock prices of Volvo Cars and Mercedes-Benz, BMW and Porsche experienced significant early trading losses with 6.5% and between 3.6% to 4.3% decreases respectively.  

French parts supplier Valeo experienced a 7.4% share value decrease as a result of the tariff issue. The automobiles and parts sector of Europe faced a 3.7% decline which established its lowest point in two weeks and proved to be the most severe drop among STOXX 600 sectoral indices as the STOXX 600 fell 1.4%.  

Also Read | Stellantis reshuffles leadership amid ongoing CEO search

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According to analysts the Mexico tariffs will do more harm to European automakers and their supply chains than actual European Union import tariffs. Research conducted by Stifel predicts that new trade measures will cut Volkswagen’s revenues down by €8 billion ($8.2 billion) and reduce Stellantis' revenues by €16 billion. Volkswagen may face a reduction of 12% in operating income during 2025 while Stellantis could experience a 40% minimum decrease of similar income.  

The escalating trade tensions prompted Volkswagen to depend on country relations that will inhibit further trade conflicts.  

Analysis from JPMorgan indicates automobile manufacturers will try to avoid higher duties by promising American domestic production growth instead of operations in Mexico or Canada.  

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European vehicle manufacturers must now carefully evaluate their American operations because the U.S. continues to tighten trade regulations thus driving changes throughout global production strategies and supply chains.