Trade tensions rise as Mercedes' maker Daimler predicts profit cut

Mercedes-Benz maker Daimler shocked investors on Thursday with a warning that trade tensions were hitting 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 after Daimler cut its 2018 profit forecast and 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 US President Donald Trump to impose tariffs on imported vehicles, arguing that trade imbalances threatened US national security.

Trump is separately promising to impose tariffs on up to $200 billion of Chinese goods, escalating a conflict that has already drawn retaliatory steps from nearly all corners of the world. China for its part has warned it will retaliate with levies on US products, potentially including the Mercedes-Benz SUVs shipped to China from Alabama. 

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Daimler’s news 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 outlook. 

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Meeting in Portugal, the heads of the US Federal Reserve, the European Central Bank, the Bank of Japan and the Reserve Bank of Australia on Wednesday all took a gloomy view on the conflict, arguing the consequences are already evident.