Feeling the Heat: Mercedes-Benz's Financial Struggles due to U.S. Trade Policies
Mercedes-Benz stock experiences a decrease following the withdrawal of profit forecast due to apprehensions over tariffs.
медаllion, Ferris wheel Facebook Twitter Flipboard Send Reddit Linkedin Messenger Telegram VK Bluesky Threads Whatsapp
Mercedes-Benz takes a dip
This morning's headlines see Mercedes-Benz's share prices slipping after the German carmaker withdraws its full-year outlook and warns of a drop in earnings.
Growing concerned about the implications of trade barriers imposed by the U.S. administration, investors are searching for answers.
Uncertainty in abundance
Mercedes-Benz's press release emphasizes the "considerable uncertainty" arising from the US tariff policy and the associated changes in tariff rates.
Though still unclear whether the complete impact of President Donald Trump's trade policies has been evaluated, the automaker highlights the difficulty in quantifying their aftermath.
Stemming from many locations
With manufacturing sites across various regions, including a plant in Tuscaloosa, Alabama, Mercedes-Benz owes a heavy presence to Germany. With the looming threat of tariffs, the carmaker may increasingly focus on U.S. production.
The hits keep coming
The first-quarter earnings report released by Mercedes-Benz shows a 41% decline in earnings before interest and taxes, dropping to €2.3 billion. Net profit plummeted, decreasing by 43% to €1.7bn, while revenue fell 7% to €33.2bn.
In the car division, the adjusted operating margin fell by 1.7 points to 7.3%.
The broader picture
Mercedes-Benz's situation mirrors the uncertainties and challenges within the German automotive sector, as their reliance on international trade exposes them to the shifting sands of tariffs and countermeasures.
A glimmer of hope for the industry?
The carmaker's tariff concerns come amidst a glimmer of hope offered by the US administration. Yesterday, President Trump signed an executive order reimbursing some auto part levies sent to the US and suspending additional tariffs for companies paying duties on cars and parts.
While these changes may ease some of the pressure, the tariffs on foreign cars ($25,000 or more) and auto parts, imposed on July 1, remain a significant concern.
German automakers like Mercedes-Benz, Stellantis, Volvo, and General Motors have vocalized their concerns, leading some to withdraw forecasts due to the unfolding trade war.
Volkswagen reported a 37% year-on-year drop in first-quarter profit, coming to €2.9 billion. Despite the setback, they remain optimistic about the full-year outlook.
Sources
- AFP (2025). Mercedes drops profit outlook due to trade tensions – Reuters. Retrieved July 14, 2025, from AFP https://www.msn.com/en-us/news/business/mercedes-drops-profit-outlook-due-to-trade-tensions-reuters/ar-AA16TjEX
- Reuters (2025). Exclusive: Mercedes-Benz may consider cutting profit outlook - sources – Reuters. Retrieved July 14, 2025, from Reuters https://www.reuters.com/business/autos-components/exclusive-mercedes-benz-may-consider-cutting-profit-outlook-sources-2025-06-10/
- Reuters (2025). Mercedes-Benz cuts Q1 profit forecast, keeps annual target - Reuters. Retrieved July 14, 2025, from Reuters https://www.reuters.com/business/autos-components/mercedes-benz-cuts-q1-profit-forecast-keeps-annual-target-2025-04-29/
- Car sales
- Car industry
- Germany
- Donald Trump
- tariffs
- The considerable uncertainty surrounding Mercedes-Benz's earnings is largely due to the US tariff policy and the associated changes in tariff rates, as mentioned in the press release.
- Although the complete impact of President Trump's trade policies on Mercedes-Benz remains unclear, the automaker is planning to shift focus towards U.S. production as its manufacturing sites are spread across various regions, including a plant in Tuscaloosa, Alabama.
- The ongoing trade tensions have led some automakers like Mercedes-Benz to withdraw their forecasts, as demonstrated by a 41% decline in earnings before interest and taxes for the first quarter, a 43% decrease in net profit, and a 7% fall in revenue. However, Mercedes-Benz's situation echoes the challenges faced by the broader German automotive sector, which relies heavily on international trade and is sensitive to tariffs and countermeasures.
