European shares fell on Thursday amid a wider selloff led by automobile stocks after US President Donald Trump said he would impose 25% “reciprocal” tariffs on cars and other goods from the European Union.
The pan-European STOXX 600 index retreated 0.4% as of 0933 GMT, after closing at a record high in the previous session.
Shares of some of the biggest European carmakers skidded, with an index of automakers and component makers falling more than 3%.
Stellantis fell 3%, BMW lost 2.6% and Porsche was down 2.5%.
“I think it’s a kneejerk reaction,” said Giles Coghlan, chief market analyst at GCFX Ltd, adding that the threats were “a bargaining tool rather than a punishing stick”.
“The market will be probably happy to look through it if it’s seen as a continuation of Trump’s current playbook,” Coghlan said.
Along with the levies on the EU, Trump also raised hopes for another month-long pause on steep new tariffs on imports from Mexico and Canada, saying they could take effect on April 2.
The European Commission said in response that it would react “firmly and immediately against unjustified barriers to free and fair trade”.
Ferrari fell more than 7.6% after Exor sold a roughly 4% stake in the luxury automaker for 3 billion euros ($3.14 billion).
Meanwhile, the retail index was down 1.4% after disappointing annual results from kitchen and joinery supplier Howden Joinery’s.
The technology index was down 1.2%, primarily hurt by a 7.3% drop in Sopra Steria following the French IT consulting company’s annual results.
Meanwhile, markets were unimpressed by Nvidia’s earnings on Wednesday, as the AI-chip bellwether’s results failed to quell investor fears of overspending on artificial-intelligence infrastructure.
Shares of European chipmakers STMicroelectronics and Soitec fell 2% and 1.8%, respectively, while chip equipment manufacturers slipped, with ASMI declining 3.1% and BESI down 2.2%.
European shares close at record high after upbeat earnings
The European aerospace and defence index bucked the trend, jumping 2.5% to an all-time high, extending the positive momentum from previous sessions.
Rolls-Royce soared 15% after the British engine-maker lifted its mid-term targets and beat 2024 profit growth expectations, as widebody jets flew more and its cost-saving plan delivered results.
The stock boosted Britain’s blue-chip FTSE 100 index 0.1%, offsetting the strain from the ad group WPP which tumbled 16.2% to a four-year low after the company reported a bigger-than-expected 1% fall in full-year organic revenue.
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