BMW says Donald Trump’s tariffs, trade conflicts may cost it €1 billion

German carmaker BMW’s CEO Oliver Zipse has said that escalating trade conflicts between the US, Europe and China will end up costing the company around €1 billion ($1.1 billion) this year.

This comes as BMW along with other European carmakers are bracing for impact from US President Donald Trump’s planned tariffs on vehicles imported to the US.

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The US tariffs will also hit cars made in Mexico and Canada apart from Europe. BMW has a plant in San Luis Potosi, Mexico which exports to the US.

Though Donald Trump has postponed the tariffs for companies which are in compliance with the USMCA trade deal, BMW falls short when it comes to local content rules.

Depsite this, Zipse’s outlook is more optimistic. “We don’t think that all these tariffs will last very long, though some of them might last longer,” a Bloomberg report quoted him as saying.

However, profit margins will be impacted. BMW’s long term aim was to keep returns over eight per cent, but now it expects a margin of between five per cent and seven per cent this year.

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He added that BMW is still “quite safe” despite the €1 billion cost estimate.

BMW however is also hit by European Union tariffs on vehicles imported from China at the same time as the US tariffs.

This pertains to its Mini brand which produces an electric car and an SUV there.

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As a result, the German automaker has joined Chinese manufacturers in challenging the levies in court.

“If you overdo it with tariffs, it sends a negative spiral to all market participants,” Zipse had said. There are “no winners in that game.