Volkswacht Bodensee - Mercedes-Benz welcomes EU-US deal after profits plunge on tariff woes

"I have respect for what the EU commission and (trade commissioner) Maros Sefcovic and co have worked up in the past few months", chief executive Ola Kaellenius told reporters on a call. "It will help us rather than damage us".

US President Donald Trump and EU Commission president Ursula von der Leyen announced a deal Sunday taking the US tariff on imported cars to 15 percent, down from 27.5 percent.

But critics in Europe including France's Prime Minister Francois Bayrouhave castigated the deal as one-sided since it foresees no baseline tariff on US goods entering the EU.

"Zero is not a gift to the Americans in this context," Kaellenius said, since German carmakers were "the biggest exporters" into the EU from the United States.

About two-thirds of the vehicles which Mercedes-Benz makes at its Tuscaloosa plant in the United States were exported out of the country, Kaellenius said, adding that Mercedes-Benz was looking to ramp up production in places where it made most economic sense.

"That is not new, not just because of these tariffs," he said. "It is best not to react hastily but to really think hard about what our footprint should be over the next five to ten years."

- Profit plunge -

Reporting second-quarter results, Mercedes-Benz said the tariffs introduced by Trump had cost the firm hundreds of millions of euros.

Without tariffs the firm's car business would have achieved a profit margin of 6.6 percent compared to an actual 5.1 percent, Mercedes-Benz said, on overall sales of 24.2 billion euros at the cars division for the quarter.

Overall net profit plunged nearly 70 percent to 957 million euros ($1.1 billion), hit by the tariffs as well as weak sales in China, prompting Mercedes-Benz to lower its full-year revenue outlook.

The firm now forecasts groupwide revenue to be "significantly below" the 146 billion euros it took in last year.

Back in February it expected 2025 revenue to be "slightly below" the 2024 level.

Trump in April slapped an additional 25-percent levy on imported cars as part of an aggressive trade policy he says will help boost US manufacturing.

That hit European carmakers, with Jeep- and Citroen-owner Stellantis as well as auto giant Volkswagen all reporting slumping North American sales at recent results.

Mercedes-Benz's own sales by volume fell 12 percent in the United States over the period.

In China they tumbled 19 percent, underlining the challenge the company faces against local competitors such as BYD.

Along with other carmakers, Mercedes-Benz then withdrew its guidance in April whilst it digested the impact of Trump's tariff blitz.

At its key cars division Mercedes-Benz said that it now forecasts a profit margin of between 4 and 6 percent, including the effects of tariffs.

Excluding tariffs it expects a profit margin of between 6 and 8 percent.

R.Kloeti--VB