Shares in US and European automakers were crushed on Monday after China announced plans to impose higher tariffs of its own, further escalating tensions with the US amid trade negotiations.
The Stoxx 600 automobile and parts index was the top laggard in the Europe-wide gauge, sliding 2.7 per cent. Automakers with exposure to China suffered some of the heaviest losses. BMW and Mercedes-Benz owner Daimler, two of the largest exporters of US vehicles to China, sank 1.5 per cent and 3.4 per cent, respectively.
In the US, Fiat Chrysler — which exports US-made Jeeps to China — led declines among the major car manufacturers with a decline of 2.9 per cent.
General Motors, the largest US automaker, counts China among its top markets by sales, although it makes most of the vehicles it sells there locally. Shares in the company fell 2.7 per cent.
Tesla, which ships electric vehicles from its California factory to China, was down 5.9 per cent.
The Dow Jones US Automobiles and Parts Index took a 3.6 per cent hit. In addition to automakers such as GM, motorcycle builder Harley-Davidson, tire maker Goodyear and parts suppliers including Visteon and BorgWarner dragged the index lower.
China announced it will raise import duties on about $60bn worth of US goods beginning June 1. The move came after President Donald Trump increased tariffs on $200bn in Chinese imports on Friday, as US officials accused Beijing of “reneging” on pledges made during trade negotiations. The fresh exchange of tariffs has stoked concerns the talks may break down, spooking investors around the globe.
After Mr Trump and Chinese president Xi Jinping agreed to a trade truce in December, Beijing lowered its tariffs on American-made cars to 15 per cent from 40 per cent.