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Daimler expects lower 2018 earnings due to new tariffs Daimler profit warning sends car shares skidding
(about 4 hours later)
German carmaker Daimler says it expects lower earnings this year amid a growing trade spat between the US and China. Shares in big European carmakers have fallen after Germany's Daimler warned of lower earnings this year because of US-China trade tensions.
It foresees lower-than-expected sales of Mercedes-Benz due to a tax on the import of US vehicles into China. Daimler forsees lower sales of Mercedes-Benz cars due to a tax on the import of US vehicles into China.
The US plans to tax at least $50bn (£38bn) of Chinese imports in response to China's alleged intellectual copyright theft. The US is putting tariffs of at least $50bn (£38bn) of Chinese imports. China said it would retaliate with its own tariffs from 6 July in return.
China said it would collect levies on billions of dollars worth of US goods, including cars, from 6 July in return. Daimler has big factories in the US that export to China.
The Trump administration has threatened further tariffs on up to $400bn worth of Chinese goods if China continues to retaliate. The Trump administration has threatened further levies on up to $400bn worth of Chinese goods if China continues to hit back.
In late morning trading in Frankfurt, Volkswagen was down 2.4%, while Daimler was more than 4% lower. On the Paris market, Peugeot-Citroen was 1.3% down, while Renault had lost 1%.
Mercedes-Benz had record sales in the first three months of this year, led by China, where sales increased by 17%.Mercedes-Benz had record sales in the first three months of this year, led by China, where sales increased by 17%.
But Daimler, the owner of Mercedes-Benz, said this year's earnings from car sales were expected to be "slightly below the previous year".But Daimler, the owner of Mercedes-Benz, said this year's earnings from car sales were expected to be "slightly below the previous year".
"From today's perspective, the decisive factor is that, at Mercedes-Benz Cars, fewer than expected SUV sales and higher than expected costs - not completely passed on to the customers - must be assumed because of increased import tariffs for US vehicles into the Chinese market," the company said."From today's perspective, the decisive factor is that, at Mercedes-Benz Cars, fewer than expected SUV sales and higher than expected costs - not completely passed on to the customers - must be assumed because of increased import tariffs for US vehicles into the Chinese market," the company said.
"This effect cannot be fully compensated by the reallocation of vehicles to other markets.""This effect cannot be fully compensated by the reallocation of vehicles to other markets."
Earlier this month, Daimler was forced to recall vehicles in Germany found to be fitted with illegal software that masks diesel emissions.Earlier this month, Daimler was forced to recall vehicles in Germany found to be fitted with illegal software that masks diesel emissions.
Daimler said the recall of diesel vehicles and declining demand in Latin America was also affecting overall earnings.Daimler said the recall of diesel vehicles and declining demand in Latin America was also affecting overall earnings.