ASML Holding (ASML.US) and other semiconductor sector stocks declined on Monday, as the looming threat of a trade war between the European Union and the United States weighed heavily on chip equities.

Dutch firm ASML saw its shares fall 3.3% in Amsterdam trading. Germany's automotive chip supplier Infineon Technologies AG (IFNNF.US) dropped 3%, while STMicroelectronics (STM.US)—a key supplier to Tesla (TSLA.US) and other automakers—plummeted 4.8%.

The sell-off followed President Donald Trump's Saturday threat to impose a 10% tariff on eight NATO members, including the Netherlands, Germany, and France, starting February 1, unless they consent to the U.S. acquisition of the Danish territory of Greenland. The tariff rate is set to escalate to 25% beginning June 1.

ASML is arguably Europe's most critical exporter to the U.S., holding a near-monopoly on the lithography machines essential for producing the world's most advanced semiconductors. FactSet data indicates the U.S. represented 16% of ASML's revenue in 2024, though the substantial cost of its individual machines can cause significant annual fluctuations.

Higher tariffs on ASML's products could inflict considerable pain on American chip giants like Intel (INTC.US) and memory-chip manufacturer Micron Technology (MU.US), as well as foreign companies such as Taiwan Semiconductor (TSM.US) that are investing in U.S.-based production facilities.