(Reuters) -Shares in European carmakers and automotive suppliers fell sharply on Tuesday, after U.S. tariffs of 25% took effect on imports from Canada as well as Mexico, a major automotive supply and manufacturing hub for global firms.

The STOXX Europe 600 Automobiles and Parts index fell the most since September 2022, and was down 5% in afternoon trading, reflecting exposure to the tariffs, with companies such as Volkswagen, Stellantis and BMW all have manufacturing sites in Mexico.

According to data from Mexico's automotive industry association, Stellantis and the Volkswagen Group -- which includes Audi -- are the two biggest European exporters of light vehicles to North America out of Mexico.

The tariffs will impact around 8 billion euros ($8.4 billion) of Volkswagen's revenue in 2025, doubling to 16 billion euros for Stellantis, Stifel Research said. Volkswagen would lose around 12% of its operating profit, while Stellantis would suffer a 40% drop if the two firms were to bear the full impact of the tariffs.

Stellantis shares fell to their lowest since July 2022.

Analysts at Citi called the tariffs a "relevant negative for the auto sector that should increase volatility across all the auto stocks ... due to a material impact on both production costs and selling prices."

German automotive supplier Continental, which provided a bleak outlook for 2025 on Tuesday, said it would analyse what the tariffs will mean for its sites in Mexico and Canada before making any decisions.

"It's therefore all the more important for Europe as an industrial location that the EU supports an open trade regime in the long term," Continental Chief Executive Nikolai Setzer said.

The group's shares dropped nearly 10% in afternoon trading.

The tariffs are a particular pain for Germany's export-oriented carmakers, who have major production hubs in the United States but have built up capacity in Mexico over the years, drawing major criticism from European policymakers.

"The EU will not be pushed around," Germany's Economy Minister Robert Habeck said. "If President Trump imposes the announced tariffs on EU products, we will react with unity and self confidence."

Mercedes-Benz, in an emailed statement, said protectionist measures often led to countermeasures, and this would have negative economic consequences for all players.

"This cannot be in the interests of politics and business."

($1 = 0.9480 euros)

(Reporting by Victoria Waldersee, Zuzanna Szymanska and Madeline Chambers in Berlin, Andrey Sychev in Gdansk, Christoph Steitz in Frankfurt and Danilo Masoni in Milan; Editing by Louise Heavens and Bernadette Baum)