BMW on Friday warned that new tariffs could cost it as much as 1 billion euros ($1.09 billion) this year, as tensions heat up between Europe, the U.S. and China.
The German automaker expects earnings margins for its cars segment to be between 5% and 7% in 2025, after hitting 6.3% in 2024, its lowest in four years. Without new tariffs, executives said guidance would be between 6% and 8%. The company has long aimed to keep returns above 8%.
Margins are expected to be hit by President Donald Trump’s 25% duties on steel and aluminum imports, as well as tariffs on vehicle imports to the U.S. from Mexico. BMW also warned that the European Union’s anti-subsidy measures on made-in China electric vehicles will negatively impact earnings in the “mid three-digit million euro range.”
BMW also said that China’s 10% tariffs, which were retaliation for Trump’s tariffs, will hit earnings. The company sends vehicles made in the U.S. to China and parts and components from China to the U.S.
According to Bloomberg Intelligence data, the cars BMW makes in Mexico and sends to the U.S. — the 3-series sedan and 2-series coupe, along with the M2 performance variants — won’t be covered by Trump’s exemptions for products covered by the USMCA trade agreements. Those models account for 12% of the automaker’s U.S. sales, according to Car & Driver.
The automaker plans to absorb the costs associated with Trump’s tariffs on Mexican imports through May 1, BMW said Wednesday. But that could change as the U.S. threatens additional tariffs on other nations.
“How we deal with this in the long term, to be honest, has to be seen because the situation is extremely volatile,” Jochen Goller, BMW’s board member overseeing sales, said on an earnings call. “And we will deal with that once we know how the customs and tariff situation is developing.”
BMW’s overall net profit declined 37% to $8.3 billion last year, while fourth quarter profit fell 41%. Global car sales dropped 4%, partly due to weaker performance in China and Germany, as well as delivery issues and a braking systems recall.
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