These European Stocks Could Be in the Firing Line in Trump’s Greenland Tariff War

A new U.S.-EU trade war is brewing and could leave several European stocks across pharmaceutical, auto, and fashion possibly exposed.

What’s Happening?

Over the weekend, President Donald Trump, threatened a 10% tariff — starting on February 1 and expanded to 25% by June 1 — on eight European allies to push forward his ambitions to make Greenland part of the U.S. The American leader noted that he plans to maintain the higher tariff until an acquisition deal is reached.

Already, the U.S. trade deal agreed with the bloc in July last year imposed a blanket 15% tariff on most EU exports, plus a steeper 50% tariff on European steel and aluminium. The latest tariff could pile on this, causing great inconvenience to European businesses across sectors, from pharmaceutical to auto and luxury.

Which Pharma Stocks Could be Exposed?

The EU pharmaceutical sector — which accounts for the bloc’s biggest export to the U.S. — could face some of the strongest headwinds from this trend. With branded medicines already taxed at 15%, additional taxes could be a burden for companies such as Danish drugmaker Novo Nordisk (NVO), Switzerland-based Roche (RHHBY) and Novartis (NVS), and France’s Sanofi (SNY), among others.

According to U.S. Pharmacopeia, in 2024, only 15% of the active ingredients in branded drugs sold in the U.S. were made domestically — 43% of them came from the EU. While the Trump administration continues to pressure pharma companies to expand domestic production, it would likely take time to see the fruits of such an effort.

Which Auto Stocks Could Face Tariff Headwinds?

Next is the auto sector, even as machinery and vehicles remain the second-largest export sector for the EU despite shrinking trade surplus between the bloc and the U.S. This brings into focus European automobile manufacturers such as Mercedes-Benz Group (MBGAF), Volkswagen (VWAGY), BMW (BMW), and Stellantis (STLA).

According to the European Automobile Manufacturers’ Association, the U.S. remains the second largest market for new EU vehicle exports after the UK. However, domestic production across U.S. plants could help reduce impact.

Which Fashion Stocks Could Be Hit?

In the fashion space, companies such as Italian fashion powerhouse LVMH (LVMUY), the UK’s Burberry (BURBY), and Italy-based Brunello Cucinelli (BC), could face some exposure as U.S. is a key fashion market for their brands.

What Are the Best Stocks to Buy?

The TipRanks Stock Comparison tool provides insight into which of these stocks mentioned in this article are considered good investment opportunities at the momnet on Wall Street. Kindly refer to the image below.

Read more about these stocks here.