Trump's Latest Move Could Wipe Out Gains In These 3 ETFs

It appears that investors placing large bets on Europe are in for a bumpy ride. Just as cash began pouring back into European ETFs, President Trump threw a curveball—hitting European imports with tough new tariffs. As the Stoxx 600 plunged 2.7% and auto stocks took a beating, some ETFs might be especially at risk. These three funds might take the heat the hardest:

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iShares MSCI Germany ETF EWG: The iShares MSCI Germany ETF has been popular so far this year, attracting more than $1 billion of U.S. money in net flows year to date, according to BlackRock data cited in a Reuters report. However, Germany’s economy depends heavily on exports, and Trump’s 25% tariff on foreign-made vehicles is a direct blow to Germany’s auto behemoths. With the Stoxx Autos index already down almost 4%, stocks such as Volkswagen, BMW and Daimler may pull this ETF lower.

SPDR EURO STOXX 50 ETF FEZ: This ETF follows Europe’s largest blue-chip stocks and with France’s CAC 40 and Germany’s DAX falling more than 3% on Thursday, things are not pretty. With a 20% tariff on EU imports, large industrials, financials and tech shares that make up this ETF are all under threat. The precipitous decline in banks on Thursday (-5.6%) and tech (-4.5%) is another red flag for FEZ investors.

Select STOXX Europe Aerospace & Defense ETF EUAD: Defense stocks are a highlight in the European markets, but this ETF is not immune to tariff issues. While the EU’s military spending is increasing, supply chains are highly integrated with the U.S. If higher costs for defense companies in Europe result from tariffs on components or as a result of retaliatory EU actions, then this ETF might lose some of its new momentum.

Also Read: Trump’s Tariff Exemptions Include Semiconductors, Pharmaceuticals, Oil And More

The Bottom Line

European ETFs were on the rebound, with American investors sending a record $10.6 billion to them during the first quarter of the calendar year, reported Reuters. Trump’s tariff blitz is different. With automaker, industrial and bank stocks getting crushed, investors in these ETFs might need to buckle up for a wild ride ahead. Now, the question is: temporary tariffs or is it a long, ugly trade war? Buckle up.

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