The Blubber

President Donald Trump’s latest round of tariffs is poised to hit Porsche AG and Mercedes-Benz Group AG the hardest, with the two automakers facing a potential €3.4 billion ($3.7 billion) hit due to new U.S. duties on imported cars.

The additional 25% tariffs, set to be collected starting April 3, could slash around a quarter of Porsche and Mercedes’ forecasted operating profits for 2026, according to Bloomberg Intelligence. To counter the financial blow, the companies may be forced to raise prices or expand production within the U.S.

Germany Tops EU in U.S. Car Exports
The U.S. imported $24.8 billion worth of vehicles from Germany last year, making it the top EU car-exporting nation to America.

The new levies could disrupt the European auto sector’s dependence on the American market, which remains a critical destination for German automakers. Germany sends more cars to the U.S. than to any other country — including a large number of high-margin internal combustion vehicles like the Porsche 911 and the Mercedes-Benz S-Class.

While other European mass-market carmakers are less exposed due to their smaller U.S. footprint, the U.S. remains the largest market for Ferrari NV, the luxury sportscar manufacturer that builds all its vehicles in Italy. Ferrari announced Thursday that it will raise prices on select models in the U.S. by up to 10%, although it will absorb the tariff cost on other models.

Markets reacted sharply. Porsche and Mercedes shares dropped as much as 5.7% in Frankfurt. BMW AG fell 4.9%, while Volkswagen AG — parent company of Audi and Lamborghini — declined up to 4.3%. Aston Martin Lagonda Global Holdings Plc tumbled 8.9% in London.

Ferrari, on the other hand, rose 1.5% in afternoon trading in Milan after confirming its financial guidance for the year, reassuring investors despite the looming tariff burden.