Autos, food and consumer products targeted by the tariffs market

The phones of private bankers, managers and brokers were ringing off the hook yesterday. Clients besieged them with calls and emails to unwind positions or adjust portfolios in European equities following the definitive entry into force of US tariffs on Mexico, Canada and China.

The main European index, the Euro Stoxx 600, lost 2.14% yesterday in its worst session since August. Its listed companies lost a total of 310 billion euros in stock market value. Investors and experts put the automotive, food and consumer sectors as the biggest losers. Yesterday's losses reflected the damage that U.S. import taxes could have on company accounts.

Automotive

The automotive and components sector was the worst performer of the day. It gave up 5.39%. It was its biggest decline since March 2022 and accounted for a loss of more than E18.3 billion to E320 billion. Experts point to Volkswagen, Mercedes and BMW as big losers as they manufacture in Mexico at lower costs to then sell their models in the United States. "BMW [fell 5.89% yesterday] is the one that worries us the most. It is the one that delivered the most vehicles in the United States versus the competition last year, about 15% of its total deliveries," says Juan José del Valle, an analyst at Activotrade. Patricia García, partner at MacroYield, points out that these companies "could negotiate with Trump, as they did in his first term, and expand their production in the US, albeit at a higher cost".

Cie Automotive and Gestamp are the two singled out in Spain in this sector. "Cie Automotive has a significant presence in Mexico as a supplier to manufacturers whose main market is the US," says César Sánchez-Grande, head of analysis at Renta 4 Banco.

Beverages and food

The listed spirits companies are also repeated among the experts. Nicolás Fernández, director of analysis at Banco Sabadell, mentions the world's largest brewer, AB Inbev, and France's Pernod Ricard. García points to Diageo, "which was already cautious in the presentation of its fourth quarter results, precisely because of the fear of tariffs".

Sánchez-Grande mentions Spain's Deoleo because "it generates more than 50% of its EBITDA in the United States". The imposition of tariffs on agricultural products is also on the table, which has a major impact on Spanish exports.

Consumption

Analysts point out that the imposition of tariffs on consumer companies, and more specifically on European luxury companies, will affect the sector's figures, and they agree in pointing to Puig. "It has an exposure to the United States close to 25%/30% of the group's total sales and we believe that the tariffs will have a relevant impact on the company's figures," Sánchez-Grande comments. Investment firms also cite giants L'Oreal, LVMH and Kering. The European luxury sector lost an average of 2.5% yesterday.

Other sectors

The analysts consulted also put the focus on companies in other sectors such as ArcelorMittal, which has a high production in Canada; Fluidra, with important sales in the United States; the chemical companies Air Liquide and Linde, which could limit the impact due to their plants in the United States; industrial companies such as Siemens, or Tubos Reunidos, because 50% of its sales come from the United States.

Derivatives

Investment managers yesterday tried to appeal to clients for calm by claiming that the impact of the levies on the accounts of the listed companies cannot yet be quantified. "The information we have is limited. We will have to see the final measures and the net impacts, some positive and some negative," Sánchez-Grande said.

Josep Prats, manager of Abante, considers that some companies, such as luxury companies, due to their pricing power and with clients with high purchasing power "have the capacity to raise prices" to try to compensate for the tariffs.

Tariffs can also hit sectors indirectly, as in the case of banks. Banco Santander and BBVA, with a strong presence in Mexico, lost 6.05% and 5.26%, respectively, yesterday. The appreciation of the dollar due to US protectionism puts pressure on emerging economies, with high levels of debt denominated in this currency. A strong dollar generates inflationary pressure and banks with exposure to these regions may see their revenues and margins shrink, weighed down by instability and higher credit costs, as inflation causes high rates.

Companies with a presence in the United States, even if they import products, may be favored by the expected lowering of taxes and deregulation in several sectors promised by Trump. This includes Spanish listed companies such as Acerinox, with local production and whose profits would grow with lower taxes", and Repsol, ACS and Ferrovial, which would also pay lower taxes in the US.