BMW chief expects lower tariffs as trade war expected to hit profits

BMW has predicted a decline in US car tariffs starting in July, citing communications with US officials.

This optimistic outlook contrasts with many of its competitors and reinforces the German automaker's confidence in its 2025 projections.

Despite this positive forecast, BMW acknowledges that existing tariffs imposed by the Trump administration will significantly impact its second-quarter results. However, executives declined to quantify the expected financial hit during an analyst call.

BMW, which operates its largest plant in the United States and holds the title of the country's leading auto exporter by value, emphasised its ongoing discussions with US policymakers. The company believes its arguments for tariff relief are gaining traction.

"We are noticing that things are moving, developing and being negotiated everywhere," stated BMW finance chief Walter Mertl. He added, "Accordingly, our reading, based on all the networks that we have at our disposal, is that we assume that something will change in July."

CEO Oliver Zipse said BMW's operations in South Carolina, home to its Spartanburg plant, supported around 43,000 direct and indirect jobs and made an economic contribution of more than $26 billion a year.

"Knowing that we are the largest exporter, we are convinced that this will play a role in some appropriate form in the negotiations in the coming weeks," Zipse said.

"We can already see that this will not be ignored, our large footprint," he said, declining to elaborate. Zipse said BMW was deeply rooted in the US market and was talking to all stakeholders to make its point.

Many of BMW's rivals, including Mercedes-Benz MBGn.DE, Ford F.N and Stellantis STLAM.MI, have pulled their 2025 forecasts, blaming the uncertainty caused by US trade policy.

BMW said its 2025 outlook, which was provided in March and factored in all tariffs announced up to that point, still stood. It has forecast earnings before tax on a par with 2024 and an operating margin at its automotive business of 5-7 per cent.

The company said that while it could only estimate the potential impact of tariffs, it expected "some of the tariff increases to be temporary, with reductions from July 2025".

BMW shares were 1.3 per cent higher at 1011 GMT, after the company reported first-quarter earnings before interest and tax of 2.02 billion euros ($2.3 billion) at its auto unit, beating analysts' average forecast of 1.85 billion euros in an LSEG poll.

Helped by strong orders and cost discipline, the unit's operating margin reached 6.9 per cent, down from the 8.8 per cent in the same period of last year, but beating the 6.3% forecast in the poll.

"In an environment where its peers have been withdrawing guidance left, right and centre, BMW's decision to stick with guidance was well-received by the market," Russ Mould, investment director at AJ Bell, said in a note.

"Part of this is predicated on some tariffs going into reverse from July onwards – so investors will be able to judge from the summer whether or not the current forecasts remain credible."

BMW included the caveat that its business performance in 2025 may deviate if tariffs increase or remain in place for longer than anticipated, and flagged the risk of potential supply bottlenecks for specific parts or raw materials.