Investing.com - European stock markets hovered around both sides of the flatline on Tuesday as investors assessed the outlook for US President Donald Trump's tariff plans following his inauguration.
The pan-European STOXX 600 was mostly unchanged at 04:25 ET (09:25 GMT), while the FTSE 100 in the UK had climbed by 0.1%.
In France, the CAC 40 was also broadly steady. But Germany's DAX dropped by 0.2%, weighed down by carmakers in the Europe's largest economy, which are viewed as exposed to Trump's trade stance.
While he unveiled a range of executive orders in the opening hours of his second term in the White House, Trump stopped short of imposing universal levies on America's allies and adversaries alike, arguing that he was not yet ready for such a step.
Instead, he directed federal agencies to look into persistent US trade deficits and perceived unfairness in trade practices by other countries.
In a memo, the Commerce and Treasury departments and the US Trade Representative were ordered by Trump to also investigate the "economic and national security implications and risks" resulting from trade deficits and recommend "appropriate" responses, "such as a global supplemental tariff or other policies" to remedy the matter.
However, initial relief among traders that the orders did not include day-one tariffs was dented when Trump told reporters that he was thinking about imposing a 25% tariff on Canada and Mexico from February 1. The move could impact European carmakers, who have factories in Mexico that produce cars for the US.
A spokesperson for German carmaking giant Volkswagen (ETR:VOWG_p) said the company was worried about the potential damage Trump's sweeping import tariffs could have on both consumers and the wider automotive industry, Reuters reported.
Shares in Volkswagen, as well as domestic peers BMW (ETR:BMWG) and Mercedes (ETR:MBGn), all dropped in morning trading, and Jeep-owner Stellantis's (BIT:STLAM) (NYSE:STLA) Milan-listed stock dipped. The broad-based automotive sector also slumped by 0.7%.
Worries around tariffs hit Spanish lender BBVA (BME:BBVA) as well. Shares in the company, whose biggest market is Mexico, slipped in Madrid, mirroring a weakening in the Mexican peso against the US dollar.
In individual stocks, shares in Abrdn rose more than 6% after the investment firm reported better-than-expected net flows in the fourth quarter, signaling a potential turnaround in its overall performance.
Meanwhile, Ørsted shares plummeted over 16% on Tuesday after the wind farm developer announced a DKK 12.1 billion impairment charge due to challenges in its US offshore wind projects.
Oil prices dropped in European trade on Tuesday after President Trump declared a national emergency on his first day in office with the intent of shoring up US energy production.
Trump said in a White House briefing that he will declare a national energy emergency and use “all necessary resources” to build up America's energy infrastructure.
Brent oil futures expiring in March fell 0.5% to $79.79 a barrel, while West Texas Intermediate crude futures fell 1.3% to $76.39 a barrel by 03:37 ET.