US-China trade row hits carmaker Daimler; firm cuts profit forecast

Carmaker Daimler became the most visible global corporation to cut its profit outlook and blame it on escalating trade tensions between the US and China, saying fewer Chinese customers will buy Mercedes-Benz SUVs because of tariffs Beijing is slapping on cars imported from America.

Just two months after projecting higher profits, the German firm said late on Wednesday that its full-year earnings, excluding some items, will be slightly lower than last year. Much of Daimler’s more than US$1 billion of C-Class sedans and GLS and GLE crossovers exported from the US last year went to China, and they are now caught up in retaliatory tariffs China announced last week in response to President Donald Trump’s levies on US$50 billion worth of Chinese goods.

With the rising prospect of an all-out trade war, few industries will be spared and more companies may have to follow Daimler, said Nicholas Smith, a strategist at CLSA Securities in Tokyo. MillerCoors, the maker of Miller Lite and Coors Lite, warned last week that US tariffs on aluminium imports could result in a US$40 million hit to its bottom line.

“Taking the cynic’s view, I think there will be a lot of companies needing to cut sales forecast and this will be an incredibly convenient reason to blame it on,” Smith said. “The Europeans will take a hit on this, the Chinese are going to find this very bumpy and it’s in the nature of a trade war that everyone loses.”