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    Mercedes-Benz Expects US-China Tit-for-Tat Tariff Spat to Hit Car Sales

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    Germany’s Daimler Benz is one of the many European companies already feeling the pinch of the escalating trade war between the United States and China.

    The maker of the world-acclaimed Mercedes cars and trucks is worried that, contrary to earlier projections, its profits this year could be “slightly below the previous year’s level,” on expectations that China will raise tariffs on vehicles imported from the United States, The Guardian wrote.

    In a tit-for-tat response to Washington’s move to impose a 25 percent tariff on $50 billion worth of Chinese goods containing “industrially significant technology,” Beijing has announced similar levies on $50 billion in US products including cars.

    Daimler AG builds Mercedes SUVs in the US and ships them to China, its biggest market.

    Taking a hit from the escalating trade spat between Washington and Beijing, Daimler has seen its shares lose 3.3 percent on the Frankfurt stock exchange.

    BMW, which has large factories in the US, has lost 2.7 percent of its stock value.

    Daimler sold a record 594,300 Mercedes cars between January and April due to strong demand in China, but the company fears that Beijing’s current row with Washington may change that.

    “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. This effect cannot be fully compensated by the reallocation of vehicles to other markets,” Daimler said in a statement.

    China’s finance ministry has said it would begin imposing its own 25 per cent tariffs on 545 categories of US products worth $34 billion including soybeans, beef, whiskey and off-road vehicles on July 6.

    READ MORE: 'Bludgeon Won't Work With China': Beijing Warns US of 'Irrational' Tariff Policy

    It also threatened to add a further $16 billion later, targeting US energy exports such as coal and crude oil.

    In May, the US took new steps in an effort to reduce its $337 billion trade deficit with China, declaring that it would slap a 25 percent tariff on $50 billion worth of Chinese goods containing “industrially significant technology.”

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    US Aims to Drive Foreign Investments Out of China Through Trade War - Analysts
    Tags:
    US-China trade war, tariffs, falling sales, BMW, Daimler AG, Germany
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