European auto shares rally after US-Japan trade deal
Shares in Japanese and South Korean automakers surged overnight on news the deal would cut the U.S. tariff on Japanese vehicle imports to 15%, from a proposed 25%.
Volvo Car (VOLCARb.ST), opens new tab jumped around 7% to its highest since mid-May. Germany's Porsche (P911_p.DE), opens new tab, BMW (BMWG.DE), opens new tab, Mercedes Benz (MBGn.DE), opens new tab, Volkswagen (VOWG.DE), opens new tab all rose between 3.8% and 6.8%. Shares in Stellantis and Renault (RENA.PA), opens new tab were up around 3%.
The European auto stocks index (.SXAP), opens new tab rose 3.4% by 0706 GMT, the most among other sectoral indices, compared with a 0.9% rise in the regional STOXX 600 index (.STOXX), opens new tab.
The European Commission is seeking to reach a trade deal outline with the United States ahead of the August 1 deadline set by U.S. President Donald Trump for broad tariff increases.
As part of these efforts, Brussels is discussing with U.S. counterparts a range of measures aimed at protecting the European Union auto industry, including tariff cuts, import quotas and credits against the value of EU automakers' U.S. exports, industry sources and trade officials say.
Citi analysts said it was notable the tariffs for a major auto exporting country were reduced without a cap on shipments, which could have implications for negotiations with the EU and South Korea.
Europe shipped nearly 758,000 cars worth 38.9 billion euros ($45.57 billion) to the U.S. in 2024, more than four times as many as in the other direction, according to data from European auto association ACEA.
However, a group representing U.S. automakers that includes Chrysler-parent Stellantis (STLAM.MI), opens new tab signalled their unhappiness with the deal, raising concerns about a trade regime that cuts tariffs on auto imports from Japan, while leaving tariffs on imports from their plants and suppliers in Canada and Mexico at 25%.
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