Daimler issues profit warning, blaming US-China trade tensions

German automotive giant Daimler told investors to expect lower earnings this year due to escalating tensions between the US and China.

Daimler waned that Mercedes-Benz sales would be lower as a result of new import taxes slapped on US vehicles coming into China, a retaliation to $50bn worth of tariffs applied to Chinese imports by Donald Trump, who has threatened further levies of as much as $400bn if the Asian superpower continues to hit back.

Daimler has multiple factories across the US that export to China.

Mercedes-Benz posted record sales in its first trading quarter, led by China, where sales jumped 17%.

However, Daimler, the owner of Mercedes-Benz, warned that this year's earnings were expected to be "slightly below the previous year".

"From today's perspective, the decisive factor is that, at Mercedes-Benz Cars, fewer than expected SUV sales and higher than expected costs - not completely passed on to the customers - must be assumed because of increased import tariffs for US vehicles into the Chinese market," Daimler said.

"This effect cannot be fully compensated by the reallocation of vehicles to other markets."

Earlier in June, Daimler was forced to recall vehicles in Germany that had been fitted with illegal software used to mask diesel emissions.

As of 1600 BST, Daimler shares had lost 4.04% to €58.01 each.