Volkswagen takes $1.5B profit dent after Trump’s auto tariffs

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Volkswagen takes $1.5B profit dent after Trump’s auto tariffs

President Trump’s auto tariffs have riddled Volkswagen, which said it was hit with a $1.5 billion profit dent after the onset of the new U.S. trade policies. 

Volkswagen said the “decline in Operating Result [is] primarily due to high costs from increased U.S. import tariffs (EUR 1.3 billion), provisions for restructuring at Audi, Volkswagen Passenger Cars, and Cariad (EUR 0.7 billion), and expenses related to CO₂ regulation” in a Friday press release.

The drop in revenue comes as the European Union (EU) awaits a permanent trade deal with the White House to ease the president’s 25 percent auto tariffs, which is slated to heavily impact car prices

Volkswagen said its automotive net cash flow for the year is expected to rake in $1-3.5 billion. 

Its analysts projected that U.S. tariffs will either remain at 27.5 percent during the second half of the year, but that the number would fall to 10 percent in the near future.

Volkswagen’s stock was up marginally at midday Friday, rising 3 percent. It is also up over the past five days.

“There is high uncertainty about further developments with regard to the tariffs, their impact and any reciprocal effects,” Volkswagen said in the Friday release.

“Challenges will arise in particular from an environment of political uncertainty, expanding trade restrictions and geopolitical tensions, the increasing intensity of competition, volatile commodity, energy and foreign exchange markets, and emissions-related requirements that have been more stringent since the beginning of the year,” it added.

Both Japan and the United Kingdom have signed agreements with the Trump administration, that left them with 15 percent and 10 percent U.S. barriers.

The EU is reportedly pushing for the 15 percent tariff on exports to the U.S.