Profits at Porsche and Volvo Cars fell sharply in the first quarter as the two European manufacturers warned of a heavy toll on the industry from Donald Trump’s trade war.

The automotive industry has rushed to cut costs and protect cash flows after the US president imposed a 25 per cent tariff on all imports of foreign-made cars from early April, with some exemptions for Mexico and Canada. A separate 25 per cent levy on auto parts is due to take effect from May 3. 

Trump is planning to spare carmakers from some of his most onerous tariffs such as those on steel and aluminium, in a climbdown following intense lobbying by industry executives. But uncertainty over the final shape of his tariffs has made it difficult for companies to calculate their cost.