German automaker BMW warned on Friday that newly imposed tariffs could cost the company €1 billion ($1.09 billion) in 2025, as tensions rise between the United States and the European Union over trade policies.
BMW, which finds itself at the center of the escalating trade dispute, is set to face additional tariffs as U.S. President Donald Trump moves to impose “reciprocal” duties on European imports. The White House’s latest move aims to counter what it sees as unfair trade barriers, adding to previous tariff hikes on steel, aluminum, and vehicles from Mexico that fail to meet new trade deal rules.
The EU, which Trump has branded as “hostile and abusive” on trade, is preparing to retaliate against the measures set to take effect on April 2. European officials have cautioned that the U.S. economy could suffer the biggest losses if the trade war continues. French Finance Minister Eric Lombard slammed the conflict as “idiotic,” vowing that the EU would respond in kind to further U.S. tariffs.
EU Trade Commissioner Maros Sefcovic held talks with U.S. officials on Friday, emphasizing the need for dialogue. “There’s a lot of work ahead, but let’s stay focused on solutions,” he said in a post on X.
Meanwhile, BMW CEO Oliver Zipse described the company’s €1 billion tariff estimate as “conservative” but remained hopeful that not all levies would remain in place for the entire year. BMW, one of Europe’s largest automakers, recently reported a 37% drop in annual profits, raising concerns about the impact of prolonged trade tensions on its financial outlook.
The fallout from the tariff battle could also hurt U.S. firms. Tesla, whose CEO Elon Musk has become an influential Trump adviser, warned that retaliatory measures from other nations could threaten its global operations. Tesla’s sales in Europe have already declined as Musk’s growing ties with far-right politicians face backlash, with the company’s stock plunging nearly 50% since mid-December.
Uncertainty surrounding the trade war has rattled markets and weighed on economic sentiment. The University of Michigan’s latest consumer confidence survey fell to a two-and-a-half-year low, while German and French central bank officials have warned of a potential recession in Europe and a significant economic blow to the U.S.
As both sides brace for further escalations, global investors and businesses remain on edge, fearing that a prolonged standoff could further destabilize financial markets and dampen economic growth.
