Headlines
BMW sees earnings hit from US tariffs as EU warns against escalation
Published by Global Banking & Finance Review®
Posted on March 14, 2025
5 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on March 14, 2025
5 min readLast updated: January 24, 2026
BMW anticipates a $1 billion impact from US tariffs, with EU officials warning of broader economic consequences. Trade tensions continue to escalate.
By Christoph Steitz, Balazs Koranyi and David Lawder
FRANKFURT/WASHINGTON (Reuters) -German carmaker BMW said on Friday it expected tariffs to cost it 1 billion euros ($1.09 billion) this year, while European officials warned the U.S. economy would be the biggest loser if President Donald Trump pursues an "idiotic" trade war.
BMW is directly in the firing line of the trade spat between Washington and the European Union, set to escalate in early April as Trump imposes "reciprocal" tariffs to match higher duty rates of EU and other countries and counteract their non-tariff trade barriers.
Trump has increased tariffs on U.S. steel and aluminium imports and imposed a 25% duty on vehicles from Mexico that do not comply with North American trade deal's rules of origin, including BMWs.
The EU, which Trump has labeled "hostile and abusive," on trade, is in line for more U.S. tariffs on April 2. The bloc has set plans to retaliate while calling for dialogue.
EU trade commissioner Maros Sefcovic spoke with U.S. Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer on Friday about the spiralling tariff conflict, calling it an important exchange and "a key part of better understanding each other."
"There's a lot of work ahead but let's stay focused and explore the best ways to move forward in the right direction," Sefocovic said in a post on X.
Sefcovic has previously said that the EU is ready to discuss lowering tariffs on both sides of the Atlantic.
The conversation comes a day after Trump responded to the EU retaliation plan by threatening to slap a 200% tariff on wine cognac and other alcohol imports from Europe.
Diageo, the world's largest spirits maker, argued in a public comment letter to the U.S. Trade Representative (USTR) that the U.S. should consider tougher rules of origin in trade agreements as an alternative to tariffs.
French Finance Minister Eric Lombard said on Friday a trade war between the EU and its U.S. ally would be "idiotic" but that the 27-country bloc would respond in kind to further tariffs.
BMW Chief Executive Oliver Zipse meanwhile said the company expected a 1 billion euro ($1.09 billion) hit to its 2025 earnings from the newly imposed U.S. tariffs and EU duties on its China-made electric vehicles.
He described the firm's estimate of the impact as "conservative" but said executives did not expect all the tariffs imposed so far to remain in place for the whole year.
BMW, one of Europe's biggest carmakers, reported a 37% drop in profits for last year.
The effects of a prolonged trade war could hurt U.S. companies as well. EV maker Tesla - whose CEO Elon Musk has become a key adviser to Trump, in charge of slashing federal spending - is exposed to reciprocal actions from other countries, the company told U.S. trade representatives in a letter on Thursday.
Tesla's sales have suffered across Europe since Musk has stepped up his support of far-right politicians in several countries; its shares are down roughly 50% since mid-December.
The company sent the letter as a response to a request for comment from the USTR's office on foreign trade practices. All told, nearly 750 comments were received by the Tuesday deadline, according to the USTR Web site.
UNCERTAINTY
Though still not yet in full swing, the trade measures and countermeasures are already affecting economic growth because nervous firms and consumers are holding back spending or delaying investment.
"Uncertainty has gone way up," said Bill Campbell, portfolio manager at investment management firm DoubleLine Capital.
"People are going to hold back on hiring, on investing until you can get some more clarity on ... how many tariffs are going to be implemented."
U.S. consumer sentiment on Friday plunged to a nearly 2-1/2-year low in March amid worries that tariffs would boost prices and undercut the economy, according to the University of Michigan Surveys of Consumers, erasing all gains in the index since Trump's election victory in November.
Stocks rebounded in both the U.S. and Europe on Friday after a rough week driven by tariff worries that pushed the S&P 500 into correction territory and safe haven gold <XAU= > to a record above $3,000 an ounce. [GLOB/MKTS]
In a possible sign the uncertainty is already taking a toll, Britain's economy contracted unexpectedly in January, extending a run of stop-start data that has beset the Labour government's attempts to spark growth.
Late on Thursday, German central bank chief Joachim Nagel described Trump's policies as "a horror show" that could tip Germany into recession, while he and his French counterpart warned the trade war would rebound on the U.S. economy.
"It's a shock for the world economy, but even more so for the American economy. It's firstly a tragedy for the American economy," French central bank governor Francois Villeroy de Galhau said.
($1 = 0.9176 euros)
(Reporting by Balazs Koranyi; Additional reporting by Christoph Steitz in Frankfurt and Philip Blenkinsop in Brussels and David Lawder in Washington; Editing by Catherine Evans and Diane Craft)
BMW expects tariffs to cost it 1 billion euros ($1.09 billion) this year.
The EU plans to retaliate against the US tariffs while calling for dialogue to resolve the trade conflict.
BMW's CEO Oliver Zipse described the firm's estimate of the tariff impact as 'conservative' and mentioned they do not expect all tariffs to remain in place for the whole year.
The trade measures are already affecting economic growth, causing firms and consumers to hold back spending and delaying investments due to increased uncertainty.
German central bank chief Joachim Nagel described Trump's policies as 'a horror show' that could tip Germany into recession.
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