Mercedes-Benz Caught in Geopolitical Crossfire as US Bill Imperils €31bn US Business While EU Tariffs Offer Fragile Support

Geopolitical risks mount for Mercedes-Benz as a US bill threatens its $34B American revenue and EU tariffs target Chinese hybrids, with shares near 2025 lows.

The automotive giant finds itself wedged between Washington and Brussels. A proposed US law targeting Chinese influence could suddenly cut off Mercedes-Benz’s access to its most profitable single market, even as the European Union moves to shield domestic manufacturers from a flood of subsidised Chinese hybrids. For a stock already nursing a 27% year-to-date loss, the twin geopolitical currents could hardly be more treacherous.

The draft “Motor Vehicle Modernization Act of 2026” would bar any carmaker from selling in the US if adversaries – including China – hold more than 15% of voting rights. Together, the BAIC Group and Geely founder Li Shufu control roughly 20% of Mercedes-Benz’s voting power. If enacted, the legislation risks the €31 billion in revenue the Stuttgart-based company generated last year in the US. Analysts currently view the bill as speculative, but the stock’s sensitivity to political headlines is painfully evident.

Brussels, meanwhile, appears ready to remove a loophole that has favoured Chinese plug-in hybrids. Reports suggest the EU will soon impose countervailing tariffs on those models, extending measures that previously covered only fully electric vehicles. Mercedes-Benz, which is leaning heavily into its electrified line-up, would benefit from the protection. Chief Executive Ola Källenius, however, has urged for a balanced outcome with Beijing, wary of triggering retaliatory measures.

The operational picture remains mixed. First-quarter revenue came in at €31.6 billion, with the car division’s adjusted return on sales hitting 4.1% – exactly within the company’s own forecast. Yet the Chinese market, where a brutal price war and weak demand persist, is acting as a drag. A small but symbolic recall of nine S-Class and EQS models from June 2025 production, linked to improperly bonded windshields, touches the premium heart of the luxury strategy without inflicting material cost.

From a technical standpoint, the stock is barely clinging to life above its recent trough of €43.99. Friday’s close of €45.09 marked a fractional gain, but the shares still sit more than 18% below their 200-day moving average. The absence of a clear buy signal leaves the door open for further selling if the €43.99 floor gives way. A push above the gap near €46.50 would ease the immediate pressure.

Shareholder support has, for the moment, evaporated. Mercedes-Benz completed its share buyback programme in early June, having spent nearly €2 billion repurchasing stock at an average price of roughly €53 per share – well above the current market level. That removes one potential near-term catalyst.

Investors now have their eyes on a pair of data points next week. On 23 June, the European Automobile Manufacturers’ Association releases new-car registration figures for May, providing a real-time read on demand trends. The same day, management will present at the Jefferies conference in Baden-Baden. The official quiet period ahead of second-quarter earnings begins on 28 June, with the full half-year numbers due on 28 July. Until then, the stock’s fate hinges on whether geopolitical tailwinds from Brussels can outweigh the storm gathering in Washington.