BMW has reported a 36 per cent fall in profits last year following weak demand in China and a global recall of cars and has warned it expects earnings will remain at a similar level this year because of new European and US tariffs.

BMW said U.S. tariffs imposed as of this week would hurt the luxury carmaker's profitability. Tariffs implemented from Wednesday will shave about 1 percentage point off the margin on earnings before interest and taxes in the auto division,