To offset the impact, manufacturers may have to raise prices or shift more production to the US
[FRANKFURT] Porsche and Mercedes-Benz Group will be hit hardest by President Donald Trump’s latest trade salvo, facing a potential 3.4 billion euros (S$4.9 billion) blow from new US tariffs on imported cars.
Trump’s additional 25 per cent duties, to be collected from Apr 3, could wipe out nearly a quarter of Porsche and Mercedes’ projected 2026 operating earnings, according to Bloomberg Intelligence. To offset the impact, manufacturers may have to raise prices or shift more production to the US.
The levies threaten to upend the European auto industry’s reliance on exports to the lucrative US market. German carmakers are most at risk as they send more vehicles to the US than to any other country, including many of their higher-margin combustion-engine models like Porsche’s 911 sports car and Mercedes’ S-Class sedan.
Trump’s latest move is “a fatal sign for free and rules-based trade,” said Germany’s VDA cars lobby, urging Brussels to negotiate with Washington for a deal. Beyond Germany’s biggest automakers, the levies also threaten to hurt parts makers including Robert Bosch and Continental.
Most German automakers operate factories in the US where they produce cars both for local buyers and export. With the European Union weighing a response, any escalation of the trade war could further damage an industry already grappling with rising costs and muted demand.
“The tariffs place a heavy burden on companies and the industry’s tightly interwoven global supply chains,” said said VDA president Hildegard Müller. The move has “negative consequences for consumers, especially in North America.” BLOOMBERG
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