Trump tariffs cost Volkswagen $1.5B in first half of 2025
What's the story
Volkswagen, the German automotive giant, has reported a massive financial blow due to tariffs imposed by US President Donald Trump. The company revealed that these tariffs cost it €1.3 billion ($1.5 billion) in the first half of this year. The impact was felt across its financials with net profit plummeting by 38.5% year-on-year (YoY) during this period to €4.48 billion ($5.26 billion).
Forecast adjustment
Profit margin forecast revised for the year
Along with the financial hit, Volkswagen has also revised its profit margin forecast for the year. The company now expects a profit margin of 4% to 5%, down from its earlier estimate of 5.5% to 6.5%. This revision comes in light of "political uncertainty and increased barriers to trade" that could impact its performance for the rest of the year.
Sales decline
North American sales volume down by 16%
Volkswagen also witnessed a 16% drop in its North American sales volume, mainly due to the tariffs. In response to these challenges, the company is looking at cost-saving measures such as cutting jobs. Last December, it reached an unprecedented agreement with unions to cut 35,000 jobs in Germany by 2030 as part of plans to save €15 billion ($17.5 billion) annually.
Tariff effects
Other European carmakers also impacted
Trump's tariffs have also affected other European carmakers. French group Stellantis reported a 25% drop in North American vehicle sales by volume in Q2. German car exports to the US also fell sharply by 13% in April and 25% in May from the same months last year, according to VDA industry association data.