European automotive stocks saw a notable rise on Wednesday, following a surge in their Asian counterparts, buoyed by news of a new trade agreement between the United States and Japan that raised hopes for a similar arrangement with the European Union.
Shares of Stellantis (BIT:STLAM), the maker of Jeep and listed in Milan, climbed alongside German giants Volkswagen (TG:VOW3), Mercedes-Benz (TG:MBG), BMW (TG:BMW), and Porsche (BIT:1PORS). Renault (EU:REN) also experienced gains, despite reporting flat sales volumes in the second quarter.
This upward momentum was fueled by sharp gains among Japanese automakers. Toyota Motor (NYSE:TM) led the charge with a 14% increase, while Honda Motor (NYSE:HMC) soared over 11%. Nissan (USOTC:NSANY) rose about 8%, and Mazda (TG:MZA) surged nearly 17%.
South Korean manufacturers also benefited, with Hyundai Motor (USOTC:HYMTF) climbing 7.5% and Kia Corp (USOTC:KIMTF) up 8.5%, amid speculation that Seoul could secure trade terms similar to those agreed upon with Japan.
These market moves followed President Donald Trump’s announcement that his administration had finalized a “massive deal” with Japan, which includes a 15% tariff. Notably, Japan’s critical auto sector—accounting for over 25% of its U.S. exports—will face this tariff rate.
Trump stated that Japan would invest $550 billion in the U.S., from which the country “will receive 90% of the Profits.”
“Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things. Japan will pay Reciprocal Tariffs to the United States of 15%,” Trump wrote in a social media post.
This agreement—among the most significant of several preliminary trade deals since Trump introduced higher tariffs in April—followed reports of Japan’s lead negotiator, Ryosei Akazawa, meeting with Trump at the White House on Tuesday.
Though the 15% tariff is less than the 25% initially proposed by Trump, it still contradicts Tokyo’s earlier insistence on exemption from all U.S. tariffs.
“The trade deal with the U.S. announced today removes a key downside risk to Japan’s economy,” Capital Economics analysts said in a client note. “We estimate that the net effect of today’s announcement will be a reduction in the average tariff rate faced by Japanese exporters in the US of around one percentage point.”
Looking beyond Japan, the progress of talks with other major U.S. trading partners, including the European Union and India, remains uncertain as the August 1 deadline for Trump’s elevated “reciprocal” tariffs approaches.
Nonetheless, “success in obtaining some agreement at this time hence should have a substantial effect in mitigating concerns about future uncertainty,” Jefferies analysts noted.
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