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BMW’s chief executive predicts that the 25% tariff on Donald Trump’s foreign automobile imports is “temporary” and will fall from July following talks by German groups with the US administration.
BMW’s shares rose more than 4% on Wednesday after the Munich-based automaker reported stronger than expected quarterly profits and maintained a full year forecast that earnings were broadly consistent last year.
BMW CEO Oliver Zipse said the company’s large production footprint in the US (which was the country’s top car exporter last year) is “effective” in negotiations with the Trump administration.
“There’s a lot of negotiation behind the scenes. That leads to the assumption that tariffs are pretty temporary,” he said. “You can see that our big footprint is not ignored.”
Gyps was one of the German automotive executives meeting Trump on April 18th to discuss the new US taxation that wreaked havoc on the industry. He is the first CEO to project that 25% tariffs will be reduced from July.
US and foreign automakers have lobbyed the US government to offset import duties when exporting vehicles from the country.
Automakers have been particularly vulnerable to Trump’s escalating trade war and the EU’s countersupply obligations to China’s EVs, and have long relied on global just-in-time supply chains to keep costs down and maintain production efficiency.
Last month, Trump provided some relief to the auto groups in the form of small rebates to automakers that produce vehicles in the US, offsetting the cost of his broader taxation, as well as providing an exemption from the administration’s tariffs on steel and aluminum in imported parts. A 25% tariff on imports of foreign-made cars still applies.
Companies have struggled to cope with frequent changes, and companies like Stellantis and Mercedes-Benz have drawn revenue guidance last month as they warned that it is impossible to predict the impact of tariffs on supply chains and consumer demand.
BMW’s Chief Financial Officer Walter Mertl gained a more positive tone on Wednesday, saying that tariffs introduced in early March will have a “significant” impact on second-quarter results, but the company hopes it will grow its U.S. business.
However, City analysts on Wednesday raised questions about BMW’s “hope for optimistic sales growth, particularly in light of the continued decline in China.”
The premium crewmaker has overcome turbulence more than its Stuttgart-based rival Mercedes-Benz. Last month, first quarter revenue fell before interest and taxes fell 41% to 2.3 billion euros.
BMW said on Wednesday that its first quarter pre-tax profit reached 3.1 billion euros, down 25% over the same period last year.
Revenue adjusted to currency fluctuations fell 9% to 33.8 billion euros.
He added that the EU’s subsidized counter-use amount for China’s electric vehicle imports reduced the “triple digits low” euro amount. This is because the company currently pays a 30% obligation for European sales such as the BMW IX3 SUV and Electric Mini Cooper produced in China.
Gyps said that “higher tariffs are caused by the EU, not by the US,” in terms of current “market distortion.”
