German carmaker Daimler says it expects lower earnings this year amid a growing trade spat between the US and China.

It foresees lower-than-expected sales of Mercedes-Benz SUVs due to a tax on the import of US vehicles into China.

The US plans to tax at least $50bn (£38bn) of Chinese imports in response to China’s alleged intellectual copyright theft.

China said it would collect levies on billions of dollars worth of US goods, including cars, from 6 July in return.

The Trump administration has threatened further tariffs on another up to $400bn worth of Chinese goods if China continues to retaliate.

Mercedes-Benz had record sales the first three months of this year, led by China, which saw sales increase by 17%.

But Daimler, the owner of Mercedes-Benz, said this year’s earnings from car sales 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,” the company said in a press release.

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

Earlier this month, Daimler was forced to recall vehicles in Germany found to be fitted with illegal software that masks diesel emissions.

Daimler said the recall of diesel vehicles and declining demand in Latin America was also affecting overall earnings.