European auto stocks experienced a significant decline following U.S. President Donald Trump's announcement of a proposed 50% tariff on European Union (EU) imports. The Stoxx Europe 600 index dropped 1.5%, with auto and luxury sectors falling over 3%. Germany's DAX index fell 2.3%, reflecting investor concerns over the potential impact on major exporters like Volkswagen, BMW, and Mercedes-Benz.

Initially set to take effect on June 1, the tariff implementation has been delayed to July 9 to allow for further negotiations between the U.S. and EU. The delay followed a conversation between President Trump and European Commission President Ursula von der Leyen, who expressed a commitment to engaging in trade discussions.

German Finance Minister Lars Klingbeil emphasized the mutual interest in resolving the dispute swiftly, noting that such tariffs would harm both economies. Germany, being the EU's top exporter to the U.S., sent goods worth €161 billion last year.

Analysts warn that the proposed tariffs could lead to increased consumer prices and potential economic slowdown. The uncertainty surrounding the trade tensions has already led to market volatility, with investors seeking safer assets amid the turmoil.

As the July 9 deadline approaches, both sides are expected to intensify negotiations to avoid a full-blown trade conflict that could have far-reaching implications for the global economy.

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