German auto giant Volkswagen said Friday that tariffs imposed by US President Donald Trump had cost it 1.3 billion euros in the first half of the year as it reported falling profit.
Overall net profit fell 38.5 percent year-on-year during the period to hit 7.28 billion euros ($8.54 billion).
Higher-sales of lower-margin electric vehicles (EVs) as well as restructuring costs hit the result in addition to the tariffs, Volkswagen said.
Finance chief Arno Antlitz said Volkswagen was nevertheless “on the right track” and that performance was at the “upper end of expectations”, if tariffs and restructuring costs are excluded.
But he warned on an earnings call that “tariffs are likely to remain a permanent burden” and said Volkswagen would have to redouble cost-cutting efforts “to offset” the effect.
The firm struck an unprecedented deal with unions last December to cut 35,000 jobs in Germany by 2030 as part of plans to save 15 billion euros a year.
The 10-brand group also cut its revenue and profit outlook, warning of “political uncertainty and increased barriers to trade” for the remainder of the year.
It now forecasts a profit margin for the year of between 4 and 5 percent, down from 5.5 to 6.5 percent previously, amounting to billions of euros for the firm.
The range assumes that the United States will levy tariffs of 10 percent on imported cars in the best case and stick to its current rate of 27.5 percent in the worst, Volkswagen said.
Volkswagen’s previous guidance, released in April shortly after new US tariffs took effect, did not take the increased duties into account.
Sales by volume in North America fell 16 percent “mainly due to tariffs” in the first half even as they rose slightly worldwide, Volkswagen said.
Trump in April slapped an additional 25-percent levy on imported cars as part of an aggressive trade policy he says will help boost US manufacturing.
That has hit European carmakers. French group Stellantis — whose brands include Jeep, Citroen and Fiat — said on Monday that North American vehicle sales by volume plunged 25 percent in the second quarter of the year.
US and European Union diplomats are currently negotiating ahead of the latest deadline set by Trump, with Trump threatening a blanket duty of 30 percent after August 1 if no agreement is reached.
CEO Oliver Blume said on the earnings call that he had a clear “plea” to negotiators.
“We are counting on the EU Commission and the US government to reach a balanced outcome on the tariff issue,” he said. “This is the basis for a competitive economy on both sides of the Atlantic.”
The carmaker’s shares were down 1.0 percent on the Frankfurt Stock Exchange, which was 0.9 percent lower overall.
