Volkswagen takes €1.3bn hit from ‘high costs' of Trump tariffs
Volkswagen said it had made strong progress realigning the company, which is considering cutting 35,000 jobs by 2030, but that it had suffered a €1.3bn (£1.13bn) 'decline in operating result primarily due to high costs from increased US import tariffs'.
The company has also reduced its profit margin range to be between 4% and 5% for the year, based on an assumption that tariffs of between 10%, at best, and the current 27.5%, at worst, will be made permanent by the US president.
The group, emblematic of German industry, also makes the Audi, Seat and Skoda brands as well as the luxury marques Lamborghini and Bentley, and commercial vehicles including Scania trucks.
Its reduced revenues underline the German chancellor Friedrich Merz's continued appeal to Trump to urgently sign a deal on tariffs with concessions for the EU car industry.
On Monday, the Vauxhall maker, Stellantis, said Trump's tariffs had already cost it €300m, while last week the Chinese-owned Swedish brand Volvo said it had paused sales of some models to the US and experienced a substantial fall in revenues in the second quarter of the year.
German car exports to the US fell sharply in April and May as import tariffs imposed by Trump hit automakers' sales in their most important foreign market, the VDA industry association said on Thursday.
Auto exports to the US fell by 13% in April and 25% in May from the same months the previous year, the VDA said. It added that 64,300 vehicles were shipped to the US over both months.
Before Trump's return to the White House, the US charged a 2.5% tariff on European-made cars, while the EU had a 10% duty on vehicles imported from the US.
The Volvo chief executive, Håkan Samuelsson, last week called on the EU to drop its 10% tariff, saying it was 'absolutely unnecessary' in an effort to accelerate a deal with the US.
However, the EU is now closing in on a deal with the US for blanket tariffs of 15% on most goods with no special exemption for the automotive industry if a deal is struck before Trump's 1 August deadline.
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On Thursday, the EU said it thought a deal was within reach but Trump is not expected to imminently sign any executive orders as he begins a private visit to his luxury golf resorts at Turnberry in Ayrshire and Menie in Aberdeenshire.
Separately, shares in German-owned Puma dropped by more than 18% on Friday morning after it said it expects US trade tariffs to cost it €80m in gross profit this year, and that it now expects to make a loss in adjusted earnings before interest and taxes.
Much of the sportswear industry faces higher costs because of the US trade tariffs, as they rely on manufacturing in China, Vietnam, Cambodia and Bangladesh.
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