Germany updates: Volkswagen profits down amid Trump tariffs – DW – 07/25/2025
After announcing a $2.9-billion (€2.5-billion) second-quarter loss on Thursday, the California-based tech giant confirmed that it would "not be pursuing planned projects in Germany and Poland."
The initial plans had involved the construction of a €30-billion chip production plant in Magdeburg, to be subsidized by the German government to the tune of around €10 billion. However, the plans were put on ice in November, with no specific reason given.
"When you look at the last few months, then Intel's decision isn't that surprising," Sven Schulze (CDU), Economy Minister for the eastern German state of Saxony-Anhalt, told local public broadcaster .
Citing Intel's internal problems and US President Donald Trump's "America first" policy, he said: "Both were bad signs for Intel investment in Europe."
Germany's biggest trade union, IG Metall, said the U-turn was "without doubt a set-back" for the region and called for "new perspectives."
Regional union boss Thorsten Gröger said that Saxony-Anhalt had developed all the infrastructural prerequisites for industrial investments in recent years, "from available spaces to transport connections to qualified personnel."
He warned Berlin not to abandon the region's industrial ambitions and ensure that "the political will remains to maintain manufacturing in the country and actively support new investments."
Meanwhile, Schulze insisted that the negotiations with Intel had at least given Saxony-Anhalt international recognition which could pay off in future.
For the time being, he referred to the decision last week by nearby Dresden chip manufacturer FMC to build a factory in Magdeburg, which he said was an important Plan B.
German automobile giant Volkswagen has posted a sharp drop in second-quarter profits, citing US tariffs, rising production costs and an increase in sales of electric vehicles with a smaller profit margin.
Volkswagen profits dropped to just under €2.3 billion ($2.7 billion) in the second quarter of 2025, a 36.3% decrease on same period last year.
The Wolfsburg-based concern said that its Porsche and Audi subsidiaries had performed particularly poorly and that sales in China were also down, but insisted the drop-off was largely in line with analysts' expectations.
Chief executive Oliver Blume insisted that Volkswagen is operating in an "extremely challenging environment," while finance director Arno Antlitz said the results were actually "at the higher end" of the company's expectations. "But, in the end, what matters is the money which actually lands in the till," he said.
"We've made tangible improvements in design, technology and quality," added Blume. "The order books are well-stocked."
Nevertheless, the firm says it will stick to its restructuring plans which it intends to "implement decisively and accelerate where necessary." Volkswagen is expecting to cut 35,000 jobs by 2030.
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A leading Austrian migration researcher has criticized the German government's deportation policies, calling them a "bluff."
"A great deal of effort is achieving very little – all while undermining EU law," claimed Gerald Knaus, chairman of the European Stability Initiative, in the Friday edition of German finance newspaper .
Knaus also defended German migration policy under former Chancellor Angela Merkel (CDU) — which has come under severe attack from Merz and his current government.
"Germany had irregular migration under control," he claimed. "The core elements of Merkel's policies after 2016 were correct, as shown by the sharp decrease in refugee numbers following the [2016] refugee deal between the European Union and Turkey.
Indeed, Knaus warned that the current government's constant criticism of Merkel, who also headed up conservative-led coalitions, only serves to help the far-right.
"The CDU is running from its own history and talking down its own success," he opined. "[Now], every time any crime is committed by a migrant, [the far-right AfD] can claim: the CDU is to blame."
The number of deportations from Germany rose to more than 11,800 in the first half of this year, according to data released by the Interior Ministry.
The figure, provided in response to a parliamentary question from a lawmaker from the far-right Alternative for Germany (AfD) party, represents an increase of over 2,000 on the same period in 2024, during which around 9,500 deportations were carried out.
The new conservative-led German government under Chancellor Friedrich Merz (CDU) has promised a tougher approach to illegal migration, tightening border checks, clamping down on "secondary migration" within the European Union and resuming deportation flights to countries such as Afghanistan and Iraq.
Earlier this month, Interior Minister Alexander Dobrindt (CSU) joined his counterparts from Austria, Denmark, France, the Czech Republic and Poland in calling for a tougher European migration and asylum policy.
"Effective returns are essential for maintaining trust in a balanced European migration policy," the ministers said in a joint statement.
Welcome to DW's coverage of developments in Germany on Friday, July 25.
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