Germanys auto sector has been struggling with soaring energy costs, US tariffs, and rising competition

German auto giant BMW has reported a sharp drop in first-half profits, as US tariffs, weak demand, and mounting competition from China took a toll on earnings.

The company posted a profit after tax of €4 billion ($4.6 billion), down 29% from the same period last year, according to a company report issued on Thursday. It marked the automaker's third consecutive first-half decline.

BMW said US import duties on cars and vehicle parts, imposed by President Donald Trump in April, weighed heavily on earnings.

EU automakers are still digesting the new 15% tariff agreed upon by Washington and Brussels, which is due to take effect in August. The trade deal, signed on Sunday, has sparked backlash across the bloc, with some EU officials calling it "scandalous" and "a disaster," saying it secured no concessions from Washington.

BMW didn't disclose how much the US tariffs cost it in the first half but warned that trade-related charges could shave 1.25 percentage points off its automotive margin this year, potentially costing billions.

CEO Oliver Zipse welcomed the tariff deal but cautioned that the duties still burden exports and hurt consumers.

BMW also flagged intense "competitive pressure," particularly from China.

Other German automotive giants reported even steeper drops. Volkswagen and Audi saw earnings tumble by over a third, while Mercedes' profits plunged more than 50%.

READ MORE: US tariffs to cost German car giants over 10bn study

The sector's downturn has fueled fears over the health of the EU's economic powerhouse. Germany endured a recession last year, and the IMF now expects zero growth in 2025, the weakest outlook among G7 nations.

(RT.com)