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Mercedes-Benz anticipates that tariffs will have a limited effect—under 3%—on its second-quarter profit margins for its core car division, according to a note by brokerage Bernstein. The outlook is buoyed by easing trade tensions between the U.S. and China and the phased introduction of tariffs, alongside continued robust sales in key markets like Europe and the U.S.
I. Q2 Margin Hit Expected to Be Less Than 3%
1. Mercedes-Benz Minimizes Tariff Concerns
Mercedes-Benz is forecasting that the effect of recent U.S. tariffs on its core car division’s profit margins will be under 3% for the second quarter, according to a note released by brokerage Bernstein. The outlook follows a private investor call with the company, held ahead of its upcoming earnings release scheduled for July 30.
2. De-escalation and Timing Help Cushion the Blow
According to Bernstein, the milder-than-expected impact stems from several factors: a partial de-escalation in U.S.-China trade tensions, some countermeasures to offset the tariffs, and the fact that the tariffs were only introduced in April and have not been in effect for the entire quarter.
II. Background and Strategic Adjustments
1. Company Pulled 2025 Earnings Guidance in April
In response to growing global trade uncertainty, Mercedes-Benz withdrew its 2025 earnings forecast earlier this year. The decision came amid speculation surrounding the full extent of the tariffs imposed by U.S. President Donald Trump on vehicle imports, leaving analysts and investors uncertain about the company’s medium-term outlook.
2. CFO Warned of Potential Margin Reductions
Back in April, the German automaker’s chief financial officer had stated that if the auto tariffs stayed in place for the rest of the year, they could cut the profit margin for its cars by as much as 300 basis points (or 3%). The impact on vans was projected to be lower, around 100 basis points (1%).
3. Positive Signs in Sales Markets
Despite tariff pressures, the company is benefiting from solid vehicle demand in both Europe and the United States. According to Bernstein’s update, Mercedes-Benz’s car sales in Europe remain “robust,” while the U.S. market continues to show steady growth, particularly at the retail level.
III. Broader Market Context and Implications
1. Trade Tensions Influencing Auto Sector
Mercedes-Benz is among several global carmakers navigating an increasingly volatile trade landscape. With tariffs and protectionist policies becoming more common, automakers must continually adjust their pricing strategies, supply chains, and investment decisions to protect margins and maintain competitiveness.
2. Strategic Communication With Investors
The private investor call — held before the company enters a mandatory quiet period ahead of its earnings announcement — offered an opportunity for Mercedes-Benz to reassure stakeholders. While no formal press coverage was allowed, brokerage firms like Bernstein shared post-call insights that reflect the company’s strategic messaging to calm market nerves.
3. Margin Pressure Remains a Watchpoint
Although the anticipated Q2 impact is now considered manageable, sustained tariffs or renewed trade tension could weigh more heavily on future results. Investors and analysts will closely monitor how Mercedes-Benz manages production costs, pricing strategies, and market mix in the coming quarters.
Conclusion
Mercedes-Benz appears to be weathering the early effects of U.S. auto tariffs with limited damage to its profit margins, thanks to partial trade de-escalation and mitigating measures. While uncertainty remains over the long-term outlook, especially if tariffs persist, strong sales in Europe and the U.S. are providing a cushion. With its Q2 earnings report due at the end of July, the automaker’s next steps—and its ability to navigate a volatile trade environment—will be closely watched by investors and industry observers alike.
