US President Donald Trump has hinted at potential relief from auto tariffs to give car manufacturers “a little bit of time” to switch production back to America. His comments followed the decision to exempt tariffs on electronic products, marking a further step back from the sweeping trade tariffs announced earlier this month.
“I’m looking for something to help some of the car companies, where they’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time because they’re going to make them here,” he said at the Oval Office on Monday.
The Trump administration imposed 25% tariffs on automobile imports on 3 April. Bloomberg previously reported that major carmakers, including Ford Motor, General Motors, and Chrysler parent Stellantis NV, were lobbying for exemptions on certain low-cost car components, as these could face additional taxes on top of the full 25% auto tariffs if sourced from outside the US.
Meanwhile, the US Department of Commerce released a notice stating it had initiated investigations into the semiconductor and pharmaceutical trades. Both probes fall under Section 232 of the National Security Investigation framework, signalling the potential for further tariffs on the two sectors and adding to the uncertainty surrounding Trump’s tariff agenda.
These investigation notices came after Trump stated that exemptions on electronic products would be temporary and emphasised that “NOBODY is getting ‘off the hook’ for the unfair Trade Balances” on Sunday.
The semiconductor investigation document noted that it aims to “determine the effects on the national security of imports of semiconductors and semiconductor manufacturing equipment (SME), and their derivative products.” The pharmaceutical probe will examine imports of “finished drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients, and key starting materials, and derivative products of those items.”
European markets to rise with automakers in the spotlight
European markets are set to open slightly higher amid Trump’s comments suggesting possible relief on auto tariffs. As of 5:18 am CEST, stock futures were broadly positive, with Germany’s DAX up 0.34%, France’s CAC 40 rising 0.21%, and the UK’s FTSE 100 gaining 0.18%.
European automakers’ shares may benefit from the shift in US policy following a bruising sell-off over the past month. Notably, shares in Germany’s major car manufacturers—Volkswagen, BMW, Porsche, and Mercedes-Benz—have each fallen between 15% and 18% during that period.
However, Europe’s technology and pharmaceutical stocks could face renewed pressure due to the US probes into the semiconductor and drug sectors. In particular, Danish pharmaceutical giant Novo Nordisk may face heightened scrutiny, as the US is its largest single market for its weight-loss drug. The firm suffered its worst monthly decline in March after a series of disappointing trial results. Investor concerns have also been stoked by Trump’s tariff threat on pharmaceutical products, which could erode profit margins.
Among tech stocks, ASML—Europe’s largest chip equipment manufacturer—will be in the spotlight ahead of its earnings results on Wednesday.
Euro holds firm on haven demand
In currencies, the euro held steady above 1.13 during Tuesday’s Asian session, hovering at its strongest level since 2022. The euro has been seen as a haven asset amid Trump’s tariff-driven trade shocks, which have triggered broader risk-off sentiment in global markets over the past month. The EUR/USD pair surged above 1.14 at one point on Monday and is likely to maintain its uptrend on continued economic uncertainty.
The European Central Bank (ECB) is expected to deliver its third consecutive interest rate cut on Thursday, reinforcing the Eurozone’s accommodative stance amid ongoing risks.
