BMW Navigates Tariff Storm: Q2 Challenges and the Path to 2025 Profitability

BMW’s CFO Walter Mertl has issued a stark warning: tariffs will inflict a “notable” drag on the automaker’s second-quarter results in 2025. With U.S. levies on foreign cars at 25% and retaliatory measures from the EU and China, BMW’s financial performance is under pressure. Yet, Mertl’s comments also reveal a strategy: leverage its global footprint and bet on tariff reductions by July 2025. For investors, the question is whether BMW’s optimism outweighs the risks.

The Tariff Impact: Costs and Context

BMW’s Q1 2025 profits fell 25% to €3.1 billion, with tariffs accounting for a significant chunk of the decline. The EU’s 30% anti-subsidy tariffs on Chinese-made EVs—applied to models like the iX3 and electric Mini—cost BMW over €100 million in the first quarter alone. reveals a dip in April, aligning with the tariff imposition timeline.

The U.S. market, BMW’s largest outside China, is a battleground. While the Spartanburg plant—the largest automotive exporter in the U.S.—buffers BMW against trade headwinds, the 25% U.S. tariff on imported vehicles remains a threat. Mertl estimates tariffs could cost the company €1 billion annually if unresolved.

Strategic Resilience: EVs and Manufacturing Hubs

BMW’s resilience hinges on two pillars: its global manufacturing network and surging EV demand. The automaker’s dual hubs in the U.S. (Spartanburg) and China (Shenyang) shield it from localized tariff spikes. Meanwhile, EV sales rose 32% year-on-year in Q1, a critical offset to declining conventional car sales in China (down 17%). shows this momentum, with EVs now comprising 22% of total sales—a figure BMW aims to boost to 50% by 2027.

CEO Oliver Zipse emphasized that these trends, combined with cost discipline, will sustain profitability. “We’re not just surviving tariffs—we’re adapting,” he stated.

The July Deadline: Tariff Reductions or More Pain?

Mertl’s optimism centers on a July 2025 deadline for U.S. tariff revisions. His confidence stems from ongoing negotiations with policymakers, leveraging BMW’s $15 billion annual contribution to the U.S. economy via exports and jobs. “Things are moving,” he noted, referencing a potential rollback of Trump-era levies.

However, risks remain. If tariffs persist beyond July, supply chain bottlenecks and retaliatory measures could amplify costs. Competitors like Mercedes-Benz and Ford have already withdrawn 2025 forecasts due to uncertainty. illustrates how levies have fluctuated, with 2025 representing a peak.

Conclusion: Betting on Trade Winds

BMW’s 2025 outlook—predicting profits “in line with 2024” and a 5-7% automotive operating margin—is a gamble. The company’s cards are its EV growth, manufacturing scale, and political clout. The €100 million Q1 tariff hit and 32% EV sales surge underscore why investors shouldn’t dismiss this strategy.

Yet, the stakes are high. If July’s tariff deadline passes without relief, BMW’s €1 billion annual tariff burden could force profit cuts. Conversely, a resolution could position BMW as a winner in a post-tariff era, especially as EVs dominate global markets. Investors should monitor two metrics: progress in U.S.-EU-China trade talks and BMW’s Q3 results, which will test whether the July pivot delivers.

For now, the verdict is split: BMW’s stock trades at a 12% discount to peers, reflecting tariff fears. But with EVs driving growth and a manufacturing moat intact, the automaker’s bet on trade normalization could pay off—if the winds finally turn.