Mercedes-Benz Cuts Profit Margin Forecast Amid U.S.-EU Trade War Uncertainty

Mercedes-Benz has revised its 2025 profit margin forecast for its car division to 4%–6%, down from its earlier projection of 6%–8%, as the impact of U.S. President Donald Trump’s escalating trade war with the European Union continues to weigh on the German automaker’s outlook.

The updated forecast marks the company’s first official assessment of trade tensions, which have disrupted global supply chains and heightened cost pressures. The luxury carmaker had initially set a higher margin target in February but was forced to withdraw that guidance in April, citing growing uncertainty over potential tariffs and their effect on production and sales.

Mercedes-Benz, renowned for its high-end models including the Mercedes-Maybach S 680 showcased at Auto Shanghai 2025, has faced significant headwinds following a 30% drop in earnings in 2024, with its car business suffering a 40% slump. The company is now navigating a volatile market environment characterized by shifting trade policies, higher input costs, and softening global demand for premium vehicles.

The ongoing U.S.-EU trade conflict has raised concerns across the automotive industry, as manufacturers face possible tariff hikes on vehicle imports and exports. Analysts warn that prolonged tensions could further compress margins and slow recovery efforts in Europe’s luxury car sector.

Mercedes-Benz’s cautious outlook underscores the broader challenges confronting automakers in 2025, with global trade disputes, fluctuating raw material prices, and evolving consumer demand for electric and hybrid models shaping industry profitability. The company’s revised forecast signals a strategic recalibration as it seeks to preserve financial stability amid ongoing geopolitical and economic uncertainty.