European stocks were lower on Friday after it was caught in the crossfire of trade war between the U.S. and China.

Euro stocks are apparently trapped in the melee that has gone off between the U.S. and China over trade, and the casualties are increasing.

While no European sector has been spared in the market rout that has ensued, the damage is most visible in the automotive, technology and mining industries as the Stoxx Europe 600 has shed 4.1 percent, expunging gains powered by the European Central Bank’s dovish tone a day earlier.

European Stocks


In automakers & suppliers sector, the Stoxx 600 Autos & Parts Index has fallen 11 percent in two weeks, wiping out almost $40 billion of the sector’s market value. Also, shares of BMW AG and Daimler AG are down at least 16 percent since mid-May.

Daimler became the first major global company to cite U.S. trade tensions as a threat to its profits, saying 2018 earnings will fall rather than rise. Its warning came before Trump issued a scaled-back threat of a 20 percent tariff on German vehicles on June 22 if the EU doesn’t remove “tariffs and barriers” on U.S. companies.

Daimler and BMW, the world’s two biggest makers of luxury cars, both have their largest sports utility vehicle factories in the U.S. BMW is the biggest U.S. car exporter by market value, with $10 billion of shipments in 2017.

Meanwhile, in the precious metals sector, the U.S. has placed tariffs of 25 percent on steel and 10 percent on aluminum and European steelmakers worry about indirect consequences such as cheap Chinese metal previously destined for the U.S. that could end up being redirected to Europe.


The EU has widened its probe into possible curbs on steel imports, adding two product categories; EU trade chief Cecilia Malmstrom has said limits could be imposed by mid-July; Canada is also preparing new measures to prevent a potential flood of steel imports

Among steelmakers, ArcelorMittal and Thyssenkrupp AG have lost 13 percent since June 14; among global miners, Rio Tinto is down 5 percent, BHP Billiton has lost 3.5 percent and Glencore has dropped 10 percent; the recent sell-off has pulled the basic resources sector’s price-to-earnings ratio to its lowest level in 12 months

Lastly, in the technology sector, the damage has mostly been in the semiconductor industry, on both sides of the Atlantic, amid mounting worries over risks of supply chain disruptions.

The Stoxx 600 Technology Index and the Philadelphia Semiconductor Index have both dropped more than 8% over the past two weeks; Infineon Technologies AG and STMicroelectronics NV are both down 17 percent.

Trump’s Trade War


Since President Donald Trump revealed additional tariffs on Chinese imports two weeks ago and pledged additional investment restrictions – prompting an immediate vow of retaliation from Beijing.

So far, Trump has levied on $250 billion of Chinese goods in the pipeline, with duties on products from allies including Canada, Mexico, and Japan already in place.

On June 22, the European Union imposed its own tariffs on 2.8 billion euros ($3.2 million) of American products in response to U.S. taxes on its steel and aluminum exports.

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