BMW, Mercedes avoid €4 billion tariffs in EU-US trade reprieve

Hindustan Times

2 days ago

BMW AG, Mercedes-Benz Group AG and other European automakers are getting a €4 billion ($4.7 billion) earnings lift from the trade deal the European Union struck with the US, according to Bloomberg Intelligence. The trade deal offers a measure of clarity in a key market for Mercedes, BMW, Porsche AG and Volvo Car AB.
European auto stocks rose on Monday over news that the rate on car imports from the EU would be lowered to 15% from 27.5%. BMW and Mercedes are also benefiting from tariff exemptions for about 185,000 cars they export annually from their American factories, BI analyst Michael Dean said in a note.
The trade deal offers a measure of clarity in a key market for Mercedes, BMW, Porsche AG and Volvo Car AB. Since Trump imposed the tariffs in April, automakers have warned of billions of dollars in added costs and supply-chain complexity, with several of them scrapping or lowering financial forecasts for the year.
'It's the best result out of what was looking like a bad situation,' auto analyst Matthias Schmidt said in comments late Sunday. 'I think German and Swedish CEOs will be sleeping more soundly tonight than they have in recent weeks.'
Still, the new rate is significantly higher than the 2.5% duty in place before Trump made his trade moves, and it forces companies to weigh whether to raise prices or move more production to the US.
Germany's VCI chemical-industry association — which includes manufacturers such as BASF SE that supply carmakers — warned that the new tariffs still hurt Europe's industry.
'If you're bracing for a hurricane, you're grateful for a storm,' VCI President Wolfgang Große Entrup said in a statement. 'Nevertheless, the agreed tariffs are too high. Europe's exports are losing competitiveness.'