Porsche AG and Mercedes-Benz Group AG will be hit hardest by President Donald Trump’s latest trade salvo, facing a potential €3.4 billion ($3.7 billion) blow from new U.S. tariffs on imported cars.
Trump’s additional 25 per cent duties, to be collected from April 3, could wipe out around a quarter of Porsche and Mercedes’ projected 2026 operating earnings, according to Bloomberg Intelligence. To offset the impact, manufacturers may have to raise prices or shift more production to the U.S.
The levies threaten to upend the European auto industry’s reliance on exports to the lucrative US market. German carmakers are most at risk as they send more vehicles to the U.S. than to any other country, including many of their higher-margin combustion-engine models like Porsche’s 911 sports car and Mercedes’ S-Class luxury sedan.
Porsche and Mercedes shares both declined as much as 5.7 per cent in Frankfurt, with BMW AG dropping 4.9 per cent. Volkswagen AG, which also owns Audi and Lamborghini, fell as much as 4.3 per cent, while Aston Martin Lagonda Global Holdings Plc slumped 8.9 per cent in London.
Trump’s latest move is “a fatal sign for free and rules-based trade,” said Germany’s VDA cars lobby, urging Brussels to negotiate with Washington for a deal. Beyond the country’s biggest automakers, the levies also threaten to hurt parts makers including Robert Bosch GmbH and Continental AG.
Most German automakers operate factories in the US where they produce cars both for local buyers and export. With the European Union weighing a response, any escalation of the trade war could further damage an industry already grappling with rising costs and muted demand.
The MSCI ACWI Automobiles Index has shed $364 billion this year through Wednesday’s close. In Europe, carmakers erased around €43 billion in market capitalization since their last peak in February including Thursday’s drop, as Trump’s tariff push overshadowed optimism over greater German spending and an economic recovery in Europe.
Still, a lot of bad news may already be priced in. Autos remain the cheapest sector in Europe, trading at just 7.3 times forward earnings, a 50 per cent discount to the broader European stock market.
Porsche, which is struggling with lower sales in China, may be most exposed. The luxury-car maker has steadily grown the last 15 years in the U.S., which just overtook China as its top market. But Porsche’s U.S. dealers are entirely reliant on imports as the manufacturer operates no factory there.
At around €44 billion, Porsche’s market value is now less than half what it was in May 2023, when the stock peaked after one of Europe’s biggest IPOs in years. The steep decline heaps more pressure on Chief Executive Officer Oliver Blume, who runs both Porsche and Volkswagen.
While disappointing demand for Porsche EVs has dogged the company in China, where deliveries fell 28 per cent last year, this is less of an issue in the US. Plug-in car adoption has been slower there, and American consumers have bought more Porsches in all years but one since 2009. Its lone down year was 2020, when the Covid-19 pandemic began.
Stellantis NV has an established U.S. production network that makes Jeep, Dodge, Chrysler and Ram models, with Renault SA least impacted as its sales are mainly in Europe. BMW earlier this month said it expects escalating trade conflicts between the US, Europe and China to cost the carmaker about €1 billion this year, but that estimate didn’t take into account Trump’s latest levies.
While auto-industry executives have long lobbied against tariffs — including those the EU imposed on made-in-China EVs — most of them are currently in wait-and-see mode as negotiations between Brussels and Washington continue. Still, even a short period with duties will hurt automakers.
“The tariffs place a heavy burden on companies and the industry’s tightly interwoven global supply chains,” said VDA President Hildegard Müller. The move has “negative consequences for consumers, especially in North America.”
--With assistance from Wilfried Eckl-Dorna, Jamie Nimmo, Marilen Martin, Albertina Torsoli and Michael Msika.
©2025 Bloomberg L.P.
