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European automaker shares slide, following Japan, South

Korea

markets

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Auto tariffs signal a blow to global trade, investors say

(Updates with early European trading)

By Tom Westbrook, Ankur Banerjee and Amanda Cooper

SINGAPORE/GDANSK, March 27 (Reuters) - Shares in some of

the world's largest auto companies tumbled on Thursday after

President Donald Trump put a wall of tariffs around the U.S.

vehicle sector, adding to worries about the hit to global trade

and to industry profits.

Trump said 25% tariffs on imported cars and light trucks

would begin on April 3, and although the duties have been well

flagged, shares in automakers from Frankfurt to Seoul tumbled.

As European markets opened, shares in Volkswagen

, Europe's top car maker, dropped 3.4%, while those

in luxury brands BMW and Mercedes-Benz fell

4%.

In Japan overnight, some $16.5 billion was wiped off

transport stocks, according to LSEG data, as shares

in Toyota ( TM ) fell 2.7%, Honda ( HMC ) 3% and Nissan ( NSANF )

2.2%. Hyundai Motor ( HYMTF ) and Kia in

South Korea dropped about 4% each.

Volkswagen is in the frame since 43% of its U.S. sales are

sourced from Mexico, S&P Global Mobility estimates, as is

Chrysler owner Stellantis ( STLA ), which along with Ford

is one of the top producers of U.S. vehicles based in

Mexico.

The head of Germany's car industry association said the

tariffs are a "fatal signal" for global trade.

"The risk of a global trade conflict - with negative

consequences for the global economy and growth, prosperity, jobs

and consumer prices - is high on all sides," VDA President

Hildegard Mueller said in a statement, calling for bilateral

U.S.-EU talks to find a solution.

The U.S. administration had set a deadline of April 2 to

unveil its broader policy on tariffs, meaning the hit to shares

was less dramatic than when Trump first threatened non-U.S.

manufacturers with extra charges.

But the signal - hurting allies and car buyers - was

nevertheless unsettling for markets which have been slow to

accept that the levies may become permanent fixtures and drive

lasting changes in world trade flows.

"It's hard not to interpret this as anything but a cue for

higher prices and lower growth," said Prashant Newnaha, senior

Asia-Pacific rates strategist at TD Securities in Singapore.

Almost half of the 16 million cars sold in the U.S. last

year were imported, with a total value exceeding $330 billion,

Goldman Sachs analysts said.

'HURRICANE-LIKE HEADWIND'

The new levies could add thousands of dollars to the cost of

an average U.S. vehicle purchase and impede production due to

the intertwined manufacturing operations developed over decades

by car makers across Canada, Mexico and the U.S.

"In our view these initial tariffs (if they hold in their

current form) would be a hurricane-like headwind to foreign (and

many U.S.) automakers and ultimately push the average price of

cars up $5,000 to $10,000," analysts at Wedbush said.

U.S. auto stocks tumbled in premarket trading on Thursday.

General Motors ( GM ) slid 7% and shares in Ford fell

almost 4%, as their supply chains are spread across North

America.

Shares in Tesla slipped about 1%, with losses

limited as the tariffs add to already punitive levies keeping

Chinese electric vehicle makers mostly out of the U.S. market.

BYD, which is leading an overseas push by Chinese

automakers, said it has no plans to sell into Canada or the

U.S., but will grow global sales and build factories abroad. Its

shares rose 2.3% on Thursday for a 53% gain so far this year.

Earlier in March, Volkswagen said it was working on back-up

plans for how its passenger car brand could tackle U.S. tariffs

on imports from Mexico, while BMW prepared to absorb

the cost.

Investors are waiting for further details of a wider range

of tariffs Trump says he will levy on trading partners next

week.

"I think the big concern is that not only will these tariffs

be disruptive and economically harmful, but they indicate that

the Trump administration's shake-up of global trade won't

necessarily end with next week's announcement," said Kyle Rodda,

a market analyst at Capital.com in Melbourne.

"This potentially drags out trade uncertainty even longer

and raises the question of how radical a change to the global

trade order is Trump trying to bring about."

(Additional reporting by Tom Westbrook and Ankur Banerjee in

Singapore and Anna Pruchnicka in Gdansk; Editing by Muralikumar

Anantharaman)