Trade Pressures Deepen as Daimler Warns on Sales

(From Reuters)

Mercedes-Benz maker Daimler (DAIGn.DE) shocked investors on Thursday with a warning that trade tensions would hit sales, while fears of a “tit-for-tat” trade war grew as Europe readied retaliatory tariffs against the United States.

Auto stocks sank to a nine-month low on European markets .SXAP after Daimler cut its 2018 profit forecast and German rival BMW (BMWG.DE) said it was considering “possible strategic options” in light of the rising trade tensions between China and the United States.

The revised forecast sparked fears of earnings downgrades across the industry and followed a proposal by U.S. President Donald Trump to impose tariffs on imported vehicles, arguing that trade imbalances threatened U.S. national security.

BMW, which also exports vehicles from the United States to China and Europe, reaffirmed its profit forecasts for this year but said these depended on worldwide political conditions staying largely unchanged.

Daimler’s warning comes a day after top central bank chiefs said a developing trade war between the world’s biggest economies was weighing on business confidence and could force central banks to downgrade their forecasts.

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