Auto giants Tesla, BMW warn of tariff fallout, predict heavy losses

Major automakers U.S.-based Tesla and German BMW have warned that escalating trade tensions between the U.S., China, and Europe could significantly affect their businesses, raising costs and weakening competitiveness in global markets.

In a letter to the U.S. Trade Representative (USTR) on Friday, Tesla cautioned that retaliatory tariffs from other nations could increase expenses for American manufacturers. The company expressed support for measures against unfair trade practices but warned that counteractions by foreign governments could disproportionately harm U.S. businesses.

The letter emphasized while addressing unfair trade is important, the consequences for American exporters must also be considered. Tesla pointed to past trade policies that prompted targeted countries to impose higher tariffs on electric vehicles, which increased costs for its U.S.-made cars and weakened their competitiveness in international markets.

Tesla urged USTR to carefully evaluate the potential repercussions of trade actions and avoid measures that might undermine efforts to strengthen domestic production. “Trade policies should align to enhance and support U.S. manufacturing,” the letter stated.

BMW prepares for a heavy blow

Meanwhile, German automaker BMW warned on Friday that it expects to take a major financial hit from the ongoing trade disputes, in addition to slowing demand in China.

During its annual results presentation, BMW’s finance chief Walter Mertl said that newly implemented U.S. tariffs on steel and aluminum, which took effect on Wednesday, would erode the company’s profit margins.

CEO Oliver Zipse estimated that the combined cost of tariffs—including EU duties on vehicles imported from China—would amount to €1 billion ($1.08 billion), according to an interview with Bloomberg TV.

The Munich-based automaker expects earnings before taxes in 2025 to remain at the same subdued level as in 2024 but warned that rapidly shifting trade policies could have a significant impact on future financial performance.

In January, Zipse urged the EU to reduce tariffs on American cars to ease trade tensions. That same month, BMW filed a legal challenge against the EU’s tariffs on Chinese electric vehicles along with other auto giants.

Speaking at the results conference, Joachim Post, BMW’s head of supply chain management, said the company’s global production network allows it to remain “flexible,” cut costs, and, where possible, avoid customs duties.

BMW’s net profit for 2024 fell 37% to €7.7 billion ($8.3 billion), with revenue declining by more than 8% to €142.4 billion. The company attributed the drop to supply chain disruptions, issues with a braking system that affected more than 1.5 million vehicles, and increasing competition in China, where local brands like BYD are gaining ground.

BMW’s vehicle deliveries in China fell 13.4% last year, while total deliveries—including its Mini and Rolls-Royce brands—declined by 4%.

The automaker is also facing uncertainty from former U.S. President Donald Trump’s aggressive trade policies, which aim to boost American manufacturing but pose risks for foreign firms, even those with U.S. production facilities.

Trump had previously imposed tariffs on Canada and Mexico before partially rolling them back following backlash from American automakers reliant on North American supply chains. He has also threatened to impose a 25% tariff on European car imports, a move that could severely impact the region’s automakers.

BMW stated that its 2025 financial outlook takes current tariff measures into account but warned that additional duties “could have a negative impact.”