BMW has cautioned that recently imposed tariffs by the United States and the European Union will dent its earnings by at least €1 billion this year, destabilising the already volatile global motor industry.
The warning comes as the German manufacturer, which produces the Mini at its Oxford plant in Cowley, braces for fresh levies on vehicles exported through the US and on China-made electric models.
Oliver Zipse, BMW’s chief executive, described the €1 billion figure as “conservative” but is hopeful not all tariffs will remain in place for the entirety of 2025. On the same day, BMW reported an 8.4 per cent fall in annual revenue to €142.4 billion, blaming “challenging geopolitical and macroeconomic conditions” for its bleak outlook.
BMW’s global footprint includes a major factory in Spartanburg, South Carolina, yet many of its 2 and 3 series and M2 models are produced in Mexico, placing them squarely under scrutiny. Although the US recently suspended tariffs on Mexican imports meeting the terms of its trade pact with Canada and Mexico, some of BMW’s vehicles fail to reach local content thresholds, leaving them exposed to potential new duties.
Around half of BMW’s US-made cars are sent abroad, primarily to Germany, China, Canada and the UK, making the company particularly vulnerable should retaliatory tariffs come into force. Meanwhile, fellow German firm Daimler Truck sounded a similar warning, announcing that trade uncertainties have already weighed on its first-quarter orders. It has responded with a €1.1 billion cost-reduction programme.
These challenges strike just as the automotive sector negotiates a transition from traditional combustion engines to electric vehicles. Last year, some 54,000 jobs were shed by major suppliers, and 2025 forecasts signal no immediate respite for an industry in flux.
France’s finance and economy minister, Éric Lombard, condemned the transatlantic tariff row as “idiotic” and called for dialogue to alleviate tensions. Christine Lagarde, president of the European Central Bank, said the spat has galvanised the EU, describing it as a “big wake-up call” that could strengthen European unity.
However, there is no shortage of hardline rhetoric in Washington. When asked about the possibility of tariffs on cars from all nations, President Trump’s ally, Howard Lutnick, told Fox Business: “That would be fair, right? If you’re going to tariff cars from anywhere, it’s got to be tariffing cars from everywhere.”
Joachim Nagel, president of Germany’s Bundesbank, labelled the US president’s approach “a horror show” that may tip Germany into recession. François Villeroy de Galhau, his French counterpart, argued that the fallout would be global, saying: “It’s firstly a tragedy for the American economy.”
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BMW braced for €1bn hit as Trump’s tariffs disrupt global car trade