German auto giant Volkswagen has revealed that tariffs imposed by the United States have dealt a major financial blow during the first half of the year. The automaker reported a staggering €1.3 billion ($1.5 billion) in losses directly linked to trade barriers introduced under former President Donald Trump’s aggressive tariff strategy targeting imported vehicles.
The company’s net profit for the same period plummeted 38.5% year-over-year, dropping to €4.48 billion ($5.26 billion). Volkswagen attributes the decline not only to tariffs but also to a sharp increase in low-margin electric vehicle (EV) sales and ongoing restructuring costs.
Despite these headwinds, CFO Arno Antlitz remains cautiously optimistic, stating that Volkswagen is “on the right track” and that performance has been “better than expected”, if one sets aside the impact of tariffs and restructuring. However, the automaker, which oversees ten major brands, has revised its full-year guidance downward, citing growing political uncertainty and tightening global trade conditions.
The group now expects an operating profit margin of 4% to 5%, down from the previous forecast of 5.5% to 6.5%, a change that could translate into billions of euros in lost earnings. Volkswagen’s updated projections are based on two possible scenarios: the more favorable assumes the US maintains a 10% import tariff, while the worst-case scenario involves the current 27.5% tariff remaining in place.
Sales volume in North America dropped 16% in the first half of the year, which Volkswagen directly linked to US tariffs. Global sales, however, saw a modest increase. The trend isn’t isolated: Stellantis, parent company of Jeep, Dodge and Chrysler, also reported a 25% drop in North American sales during Q2.
Meanwhile, US and EU negotiators are scrambling to reach a deal before August 1, the deadline set by Trump, who has threatened to impose a sweeping 30% tariff on imported vehicles if no agreement is reached.
