Auto giants have been hobbled by new EU tariffs on steel, sparking panic in the industry

Shares of Europe’s largest automakers fell on Wednesday, amid concerns that recent efforts by the European Union to protect the domestic steel market could threaten the region’s auto sector.

The European Commission, the executive arm of the European Union, Announce China announced on Tuesday that it plans to increase steel tariffs and sharply cut import quotas, seeking to provide “strong and lasting protection” for the region’s steel industry.

The proposal includes a push to limit the volume of duty-free imports to 18.3 million tons annually, which reflects a 47% drop compared to steel quotas for 2024 – and to double tariffs to 50% on any excess imports.

The planned measures were not well received within the European automotive industry.

The European Stoxx Auto & Parts Index fell 1.8% at around 12:14pm London time (7:14am ET) on Wednesday, leading to regional losses.

In response to the EU announcement, the Association of European Automobile Manufacturers (ACEA), an industry lobby group, He said The proposal goes further and threatens automakers with higher input and administrative costs.

Sigrid de Vries, director general of ACEA, said European carmakers source nearly 90% of their direct steel purchases in the EU and were “most concerned about the inflationary impact that the effective continuation of guarantees will have on European market prices.”

She added: “We do not object to the need for a certain level of protection for the commodity industry such as steel, but we feel that the standards proposed by the Commission go too far in encircling the European market.”

ACEA’s De Vries instead called for a “better balance” between news from European producers and steel users in the measure.

Looking at individual stocks, in Germany BMW It fell about 8% on Wednesday, falling towards the bottom of the European Stoxx 600 index.

The Munich-based carmaker, which is said to be on track for its worst trading day since September last year, Issued New earnings warning on Tuesday, citing slowing growth in China and the continuing impact of US import tariffs.

Rico Lohmann, chief economist for transport and logistics at Dutch bank ING, described BMW’s earnings warning as “disappointing” rather than a positive sign regarding… Many challenges Facing European automakers.

“During the second quarter numbers showed that they were still somewhat optimistic about dealing with reality and maintaining margins, but that relative optimism appears to have faded now,” Lohman told CNBC via email.

Germany Mercedes Benz group, Porsche and Volkswagen They were all down about 2%.

France shares Renault Milano included Stellantis They were last seen down 2.5% and 0.3% respectively.

In pre-market trade in the US, meanwhile, shares rose Ford Listed in New York Stellantis She was last seen slightly above.