German luxury carmaker Daimler AG on Wednesday cut its profit forecast for this year, blaming new tariffs on cars exported from the US to China, amid lingering fears of a trade war between the world’s biggest economies.
“Fewer than expected SUV sales and higher than expected costs — not completely passed on to the customers — must be assumed because of increased import tariffs for US vehicles into the Chinese market,” Daimler, which manufactures Mercedes-Benz, said in a statement.
As a result, Daimler said it now predicts that its underlying or operating profit, as measured by earnings before interest and tax, will be slightly lower than last year, instead of slightly more, as it previously expected.
Last week, US President Donald Trump announced 25 percent tariffs on US$50 billion in Chinese imports, sparking trade war fears and prompting Beijing to retaliate with matching duties on US goods, including cars.
A study in April by asset managers AllianceBernstein showed that German carmakers with big US operations, such as Daimler, would be worse hit by proposed Chinese import tariffs than US auto firms.
Daimler also warned that sales would be affected by stricter European fuel efficiency test procedures after a mass recall of some of its diesel vehicles.
Germany last week ordered the recall of about 774,000 Daimler vehicles across Europe, citing illegal “defeat devices” designed to conceal high levels of harmful emissions from regulators’ tests.
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