The guidance update comes after the U.S. and EU on Sunday agreed a deal that will apply a 15% tariff to cars shipped from Europe to the U.S. That marks a sharp drop from the 27.5% European automakers have been paying since April, but still represents a hefty increase from the 2.5% that applied before President Trump began his second term in office.

Mercedes-Benz expects a profit margin of 4% to 6% for its car business this year, including a nearly $420 million impact from tariffs, it said on Wednesday in a first assessment of the damage from U.S.