Volkswagen Loses $1.5 bn by
Trump’s Tariffs
The German automaker said U.S. import
duties erased about $1.5 billion from its profit in the first half of the year,
and it lowered its forecasts for the full year.
Volkswagen Profits Fall Due to Trump
Tariffs and EV Market Pressures (25 July 2025)
·
Profit Decline: Volkswagen’s operating profit fell by 33%
to €6.7 billion in H1 2025, mainly due to a €1.3 billion ($1.5 billion) hit from U.S.
tariffs.
·
Tariff Impact: The 25% U.S. tariff on imported cars and
50% tariffs on steel and aluminum hurt North American sales,
which dropped 16%.
·
Market Conditions: Struggles in the electric vehicle (EV)
market further strained profits, though VW overtook Tesla in EV deliveries in
Europe.
·
Revised Forecast: Volkswagen cut its full-year guidance for
sales, profit, and cash flow, warning earnings may hit the lower end of expectations.
·
U.S. Strategy: To mitigate tariff effects, VW is
expanding its Tennessee
plant, investing $2
billion for Scout truck production, and exploring Audi model production in
the U.S.
·
Industry-Wide Impact: Stellantis and Volvo
Cars also reported tariff-related losses. Volvo plans to shift XC60 SUV assembly to South
Carolina.
·
Trade Plea: VW CEO Oliver Blume urged the EU and U.S. to reach a “balanced” trade agreement,
advocating for open,
rule-based trade and mutual tariff reduction.
The
situation highlights the vulnerability
of European automakers to global trade tensions and the need
for production realignment
in response to protectionist policies.
Volkswagen’s
profit dropped by a third in the first half of the year, the German auto giant said
on Friday (25.07.2025), dragged down by the tough market for electric cars and President
Trump’s tariffs.
The
carmaker was the latest in Europe to report a dent in earnings because of the 25
percent additional tariff imposed by Mr. Trump on cars imported by the United States,
following Stellantis and Volvo Cars.
Volkswagen
said tariffs cost it 1.3 billion euros ($1.5 billion) in the first six months of
the year, leading to a 33 percent decline in operating profit, to €6.7 billion.
The company’s revenue was roughly the same as the previous year.
The
auto giant cut its full-year forecasts for sales, profit and cash flow, and warned
that if tariffs remained at current levels, its earnings would probably come in
at the lower end of its expected range.
One
bright spot was an increase in the number of cars delivered in Europe, where Volkswagen
has overtaken Tesla as the market leader in electric vehicles.
Arno
Antlitz, Volkswagen’s chief financial officer, said it was a “mixed picture,” citing
the contrast between the resonance among car buyers for its newest models and the
general challenges that electric cars are facing, along with the drag of tariffs.
European
carmakers have been squeezed since Mr. Trump imposed steep tariffs on imported vehicles.
Automakers rely on global supply chains, making them vulnerable to increased import
taxes. A 50 percent U.S. tariff on steel and aluminum
— essential materials for car production — added further strain.
Volkswagen
said sales in North America dropped 16 percent in the first half of the year, largely
because of the tariffs.
On
Monday, Stellantis, which owns Chrysler and Jeep as well as the European brands
Peugeot and Fiat, said tariffs and factory shutdowns related to Mr. Trump’s trade
policies contributed to a €2.3 billion loss in the first half of the year, with
deliveries to U.S. buyers plunging 25 percent over that period.
Volvo
Cars, which is based in Sweden but owned by China’s Geely Holding, reported a steep
fall in profit in the second quarter. The company took an impairment charge of more
than $1 billion on tariffs and production delays.
Mr.
Trump and members of his administration have been adamant that they want to see
foreign carmakers move production to the United States. Last week, Volvo said it
would move assembly of its best-selling model, the XC60 S.U.V., to its plant in
Charleston, S.C., to reduce the impact of tariffs.
Volkswagen
has a factory in Chattanooga, Tenn., and is investing $2 billion in a plant to make
an updated version of Scout trucks, which will join Audi, Porsche and VW among the
company’s brands. Volkswagen has also been exploring whether it could move production
of some Audi models to the United States.
German
automakers have played a key role in helping the European Union to lobby Washington
for a reduction in Mr. Trump’s 25 percent auto tariffs. They have also argued against
the European bloc’s introducing retaliatory measures on U.S. goods shipped to Europe,
arguing that they would be doubly penalized because they produce and export autos
in both regions.
Some
European automakers have called on Brussels to drop the 10 percent tariffs that
the European Union imposes on cars made in the United States and imported into the
bloc, saying Europe’s industry does not need the protection. Last year, German automakers
produced some 844,000 cars in the United States, roughly half of them for export.
On
Friday, Oliver Blume, Volkswagen’s chief executive, described his “plea” to trade
negotiators in Europe and the United States.
“We
are counting on the E.U. commission and the U.S. government to reach a balanced
outcome on the tariff issue,” he said on a call with analysts, hoping for an agreement
that ensured “rule-based trade, open markets and stable trade relations.”