Trade contracts aside, Mercedes and Porsche see more tariff pain along the way

Despite the contours of the reserve trade agreement, German automaker Mercedes (MBG.DE) and Porsche (P911.de) suffers from Trump’s tariff burden and is struggling to change consumer preferences in markets like the US and China.

First, Mercedes.

In the second quarter, Luxe Carmaker reported revenue declined 10% to 331.5 billion euros ($38.2 billion) and adjusted EBIT (earnings before interest and taxes) 1.273 billion euros ($1.47 billion). Net income fell nearly 70% in the quarter to 957 million euros ($1.1 billion).

“The dynamic market environment, volatile tariff policies, particularly challenging competition in China, and upcoming model changes have affected sales development,” Mercedes said in a statement.

As a result, Mercedes has cut its outlook for 2025. In the automotive business, we found that revenue margins (or margins) immersed in the 4%-6% range compared to the previously seen 6%-8%.

In analyst call, Mercedes CFO Harald Wilhelm said that the impact of tariffs was “Millions of mid-triple digits” I add that the effect will be higher in the second half, but it still falls within that quarterly range.

read more: What does Trump’s tariff mean for the economy and your wallet?

Wilhelm said the impact of tariffs this year would reach 150 basis points (1.5%) despite a new tariff drop of 15% compared to 27.5%, which was imposed before the reserve trade transaction.

The situation at Porsche is not that good.

The Stuttgart-based automaker’s revenues fell to 18.2 billion euros ($210.4 billion) in the first half of 2025, down 6.7% from a year ago, with EBIT falling to 10.1 billion euros ($1.17 billion), with a third falling to a third ($354 billion). Porsche said “extraordinary costs” hit EBIT, which includes tariff costs of 400 million euros ($462.4 million).

As a result, Porsche said sales for the year would fall from 14.1% enjoyed in 2024 to the 5%-7% range. Similarly, he said revenues will fall from 37 billion euros to 38 billion euros ($428 billion to $43 billion) ($4.01 billion euros) ($4.635 billion).

“We continue to face major challenges around the world,” said Oliver Bloom, CEO of Porsche. “And this is not a storm that passes.”

In a preliminary US-EU deal, future tariff rates will be reduced to 15% for European imports, but this is still a huge cost for German automakers. Previous tariff rates were only 2.5%. This means that customers pay for increased costs.