Donald Trump’s recent imposition of a 25 percent tariff on automobile imports in the USA from certain countries has stunned the global market. Many auto OEMs have voiced their concerns over this new tariff regime which is set to increase prices of imported cars in the USA and could potentially lead to a decline in demand.
A recent Bloomberg report highlights that Porsche and Mercedes-Benz are set to be the most affected by President Trump’s latest trade measures, facing a potential $3.7 billion (approximately INR 31,688.90 crore) impact from new U.S. tariffs on imported vehicles.
Mercedes-Benz, Porsche earnings deprived
The additional 25% tariffs, set to take effect on April 3, could erase nearly a quarter of Porsche and Mercedes’ projected 2026 operating earnings, according to Bloomberg Intelligence. To mitigate the financial strain, manufacturers may need to increase prices or shift more production to the U.S.
These tariffs pose a significant threat to the European automotive industry, which heavily relies on exports to the profitable U.S. market. German carmakers, in particular, face the greatest risk, as the U.S. remains their largest export destination, especially for high-margin combustion-engine models such as the Porsche 911 sports car and the Mercedes S-Class luxury sedan.
Last year, the US auto market imported $24.8 billion worth of cars from Germany. Most German automakers operate factories in the US where they produce cars both for local buyers and export. However, select luxury and performance models are made in Europe and brought to the US as fully-imported units. TTrump has threatened to impose “far larger” tariffs if Europe works with Canada to do what he describes as “economic harm” to the US.
With inputs from Bloomberg
