Luxury European carmakers warn that higher prices are coming if Trump doesn't back off tariffs

Porsche is more exposed to the US tariffs than many of its rivals, as it imports all the cars it sells in the US.CHANAKARN LAOSARAKHAM/AFP via Getty ImagesEuropean luxury carmakers Porsche and Volvo both issued fresh tariff warnings on Tuesday.The two companies reported collapsing profits as US auto tariffs batter the industry.A Porsche executive warned prices would "definitely" rise if Trump didn't back down.Trump's tariffs are battering the car industry, and buyers of luxury European motors are about to feel the pain.European luxury brands Porsche and Volvo issued new tariff warnings on Tuesday as they reported collapsing profits, with Porsche's CFO saying the company would "definitely" hike prices if the Trump administration did not back down."If negotiations do not turn out to be successful, and the tariff regime stays as we see it today, we will definitely increase prices in the US," said Porsche's CFO, Jochen Breckner, in an earnings call.The German luxury brand, which said it has not yet adjusted prices in the US, is more exposed to the tariffs than many of its rivals, as it imports all the cars that it sells in the country.Porsche cut its return on sales guidance for the second time in two months on Tuesday and said that profits had collapsed 40% in the first quarter.The company has seen sales fall in Europe and China, but said that US deliveries had risen 42% in the first three months of the year.Swedish rival Volvo Cars, which sells the $80,000 EX90 among other models in the US, also signalled that it would look to pass some of the cost of the tariffs onto consumers."For the US, we are taking commercial measures linked to pricing and what cars we sell," Volvo CFO Fredrik Hansson told analysts in an earnings call on Tuesday, adding that the company continued to monitor the market on "basically a daily basis."Volvo Cars reported a 59% drop in operating profit in the first quarter of 2025 and withheld guidance for this year and 2026, and Hansson warned that "commercial measures" would likely not be enough to steady the ship.The company said it would enact a $1.9 billion cost-cutting plan that would involve an unspecified number of layoffs. Volvo's shares were down over 9% on Tuesday, while Porsche's also slumped 6%.The warnings from European firms come as the Trump administration hinted that tariff relief could be imminent for automakers.A White House spokesperson told multiple outlets that while the 25% tariffs on imported vehicles would remain in place, automakers would be exempted from additional tariffs, such as those on imported steel and aluminum, and would be reimbursed for some of the cost of tariffs on imported car parts.The coming U-turn will come as a relief for carmakers like Ford and GM, which faced having their profits wiped out as a result of the levies, but it is unlikely to prevent carmakers from hiking their prices as they look to absorb the cost of the tariffs.Automakers and analysts have warned that the 25% import tax will lead to major price hikes. Anderson Economic Group previously estimated that new car prices will rise between $4,000 and $12,000, depending on the vehicle.Read the original article on Business Insider

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