According to Politico EU has signaled that is willing to go to zero tariffs on all industrial goods, including cars in itEU ready to agree on Zero Tariffs on Industrial Goods with US – Autos Benefits trade talks with the US. European commissioner for trade Cecilia Malmstrom noted EU is willing to completely scrap the tariffs if US does the same, saying
“We are willing to bring down even our car tariffs down to zero … if the U.S. does the same,” she said, adding that “it would be good for us economically, and for them”
As it currently stands, EUs auto tariff is at 10% vs 2.5% for the US. US has though 25% duty on light trucks and pickups.
This could potentially be very beneficial for European Auto and Auto-parts companies, which have suffered substantially this year, with the SXAP Index down 13% YTD and down some 20% from year highs.
The gap between SXAP (orange) and Euro Stoxx 50 (white) is at widest levels this year. Time for a relative auto long trade?
Source: charts by Bloomberg
The major listed European Auto companies that could benefit from the potential removal of tariffs are; BMW (BMW DE), Volkswagen (VOW3 DE) , Daimler (DAI DE), Conti (CON DE), Renault (RNO FP), Volvo (VOLVB SS), Michelin (ML.FP) Faurecia (EO.FP) and Autoliv (ALV US). All of these stocks have suffered with the uncertainty about tariffs.