BMW Shrugs Off Trump Tariff Threat, Keeps 2026 Guidance After Earnings Beat

German automaker BMW has reaffirmed its 2026 financial outlook, downplaying the impact of potential U.S. tariff hikes after reporting stronger-than-expected quarterly profits despite a significant earnings drop.

The luxury carmaker said its first-quarter pre-tax profit fell by about 25% year-on-year to €2.3 billion, but still exceeded analysts’ forecasts of €2.2 billion, signaling resilience amid mounting global pressures.

BMW’s core automotive margin came in at 5.0%, beating expectations even though it declined from 6.9% a year earlier. However, group revenue dropped 8.1% to around €31 billion, largely due to weak demand in China; its largest single market.

Despite the softer earnings, the company maintained its full-year guidance, projecting a moderate decline in overall profit and an operating margin range of 4% to 6% for 2026.

Concerns had intensified after Donald Trump threatened to raise tariffs on European car imports from 15% to 25%. However, BMW CEO Oliver Zipse dismissed the move as a negotiating tactic aimed at pushing the European Union to ease trade restrictions on U.S. goods.

Tariffs; alongside rising raw material costs and competition from Chinese automakers have already dented BMW’s margins, with levies shaving about 1.25 percentage points off its automotive profitability in the first quarter.

Still, investors responded positively, with BMW shares rising by nearly 5% following the earnings release, reflecting confidence in the company’s ability to navigate ongoing geopolitical and market uncertainties.

Like rivals Mercedes-Benz and Audi, BMW continues to face pressure from slowing global demand, particularly in China, and intensifying competition from local electric vehicle manufacturers.

To offset these challenges, BMW said it is focusing on cost-cutting measures, improved factory efficiency, and reduced investment spending while avoiding job cuts, as it pushes forward with its next-generation “Neue Klasse” vehicle platform.