Published: Fri, June 22, 2018
Business | By Tara Barton

Daimler warns Mercedes taking hit from China trade war

Carmaker Daimler has said it expects lower earnings this year amid a growing trade spat between the USA and China.

Daimler expects earnings in its Mercedes-Benz cars division to be slightly below a year ago as a result.

China said it would retaliate with its own tariffs from 6 July in return.

Daimler makes Mercedes SUVs in the USA and ships them to China, its biggest market. The company has said previously the majority of the SUVs it produces in Alabama are exported around the world but declined to provide China-specific data. The measures are in retaliation for the Trump administration's tariffs on a similar amount of Chinese goods.

Korea, U.S. suspend August joint military drill
However, US President Donald Trump recently announced he will meet with the North Korean leader in Singapore on June 12. Kim again saw Xi in Dalian in May after having met South Korea's president Moon Jae-in at Panmunjom on April 27.

In late morning trading in Frankfurt, Volkswagen was down 2.4%, while Daimler was more than 4% lower. However, this is unlikely to last because of the trade spat, the carmaker warned.

Daimler said late Wednesday that it now sees fewer SUV sales and higher costs at its Mercedes-Benz Cars division than previously expected because of the tariffs, and "this effect can not be fully compensated by the reallocation of vehicles to other markets".

"This effect can not be fully compensated by the reallocation of vehicles to other markets", Daimler said.

The company said sales would also be affected by the new certification process for emissions tests, which takes effect in September.

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