Volkswagen just got hit hard. The German auto giant took a major blow with a $1.5 billion loss from U.S. import tariffs in the first half of 2025. As a result, the company cut its sales and profit forecast for the year.
Earlier, Volkswagen expected its operating profit margin to be between 5.5% and 6.5%. Now, it says it will be between 4% and 5%. Sales, which were expected to rise 5%, are now likely to stay flat.
The reason? A trade war triggered by U.S. President Donald Trump. Automakers around the world are feeling the pain. But for Volkswagen, the impact is sharp and immediate.
Stocks Tumble, Then Recover
Volkswagen shares dropped 4.6% after markets opened on Friday. But by mid-morning, they had recovered and were up 2.5%. Why? Investors had expected bad news. The company had not assessed the full tariff damage last quarter. This was the first time they gave clear numbers.
CEO Oliver Blume didn’t sugarcoat the situation. He said the company must cut costs fast. “We can’t act like these tariffs are temporary,” he told investors.
Hope for a Trade Deal?
Volkswagen and other carmakers are pushing European leaders to make a deal with the U.S. Right now, they are facing a 25% tariff on vehicles since April. The fear is it may rise to 30% by August 1.
There’s a bit of hope. The U.S. and Japan just signed a deal with a 15% tariff rate. If Europe gets a similar deal, Volkswagen says it could stay in the middle of its profit forecast.
But time is running out. “We are already in July,” warned CFO Arno Antlitz. “If no deal is reached soon, we’ll hit the lower end of our forecast.”
Also Read Volvo Cars Beats Q2 Profit Forecasts Despite Lower Earnings and Tariffs
EV Transition Adds Pressure
There’s more pressure from other directions too. Europe is pushing hard for electric vehicles. Volkswagen is trying to shift fast, but EVs have lower profit margins. Plus, building new systems is expensive.
In the last quarter, Volkswagen made 3.8 billion euros in profit. That’s down 29% from the same time last year.
Deliveries worldwide grew 1.5%, but U.S. sales dropped by 10%. North America brings in 18.5% of Volkswagen’s global revenue.
No U.S. Production, More Trouble
Brands like Audi and Porsche, part of the Volkswagen Group, don’t produce cars in the U.S. They rely on exports. That makes them more vulnerable to U.S. tariffs.
The company is also going through a big restructure. Over 35,000 jobs will be cut by 2030. And the European car market is showing signs of slowing down.
For Volkswagen, it’s a perfect storm. Tariffs, EV costs, job cuts, and a tight race to the future.
Also Read European Car Sales Drop Over 5% in June Amid EV Shift and Trade Woes
