German carmaker BMW said on Friday it expected tariffs to cost it €1 billion this year, while European officials warned the US economy would be the biggest loser if president Donald Trump pursues an “idiotic” trade war.
BMW is directly in the firing line of the escalating trade spat between Washington and the European Union.
Mr Trump has increased tariffs on US steel and aluminium imports and imposed a 25 per cent duty on some vehicles from Mexico, including BMW’s, and threatened more tariffs on the EU, which he has called “hostile and abusive”. The EU has vowed to retaliate while calling for dialogue.
BMW chief executive Oliver Zipse said the company expected a €1 billion euro hit to its 2025 earnings from the newly imposed US tariffs and EU duties on its China-made electric vehicles.
Houses evacuated after hillwalker takes home artillery shell
Power struggles, resignations and Conor McGregor’s toxicity: The fracturing of Ireland’s far right
Airbnb and other letting platforms could face millions of euro in fines in Ireland under new rules
Rosie O’Donnell on her new life in Dublin: ‘I see reflections of myself in this country everywhere I look’
Its profits are expected lag well below its long-term targets this year.
The German manufacturer expects an automaking margin of between 5 per cent and 7 per cent this year, after the measure fell to 6.3 per cent in 2024, the lowest in four years. BMW’s long-standing aim is to keep its car-making returns above 8 per cent.
BMW shares declined as much as 4.5 per cent on Friday. The stock has fallen more than 20 per cent over the past year.
BMW is facing another difficult year as it grapples with intense competition in China, where local electric-vehicle producers led by BYD are taking over. At the same time, tariffs in the US and Europe are clouding the outlook.
The company is looking to reclaim market share as it starts production of its Neue Klasse, a new line of EVs, later this year. BMW plans to release 40 new and updated vehicles of all drivetrain variants on to the market by 2027.
“We have growth ambitions because we have strong products,” Mr Zipse said. “We look with a positive mood into 2025 despite all the political turmoil we might have.”
‘My plan is to make sure Smurfit Westrock is one of the great companies of the world’: Tony Smurfit on taking the family business global
US tariffs are already hitting the cars BMW manufactures in San Luis Potosi, Mexico. President Donald Trump postponed the levies for companies in compliance with the USMCA trade deal, but BMW falls short of local content rules.
In response, the company is looking into locating more manufacturing in North America to comply with the agreement, production head Milan Nedeljkovic said. Some investments already planned in the US and Mexico will help close the gap.
Even so, the situation could worsen if Trump follows through with levies on vehicles imported from Europe, where the company makes its top-line sedans.
“We don’t think that all these tariffs will last very long, though some of them might last longer,” Mr Zipse said. With a cost estimate of €1 billion, “we are quite safe,” he added.
BMW’s overall net profit declined about 37 per cent in 2024 to €7.68 billion ($8.3 billion). The carmaker was weighed down by a recall related to braking systems supplied by Continental AG.
BMW’s global car sales dropped 4 per cent last year, with weaker performance in China dragging on results. – Reuters/Bloomberg
