Volkswagen warns Trump’s tariffs will cost it €5bn a year

Volkswagen will move production of its iconic VW Golf from Germany to Mexico - Ronny HARTMANN / AFP

Volkswagen has fallen to its first quarterly loss since the start of Covid-19 after warning Donald Trump’s tariffs will inflict a €5bn (£4.4bn) a year hit to its business.

The German carmaker, which owns brands including Porsche, Bentley and Audi, on Thursday said it had swung to a €1.3bn loss in the third quarter of 2025, compared to a €2.8bn profit for the same period a year earlier.

It blamed the losses on America’s new trade levies and an abortive shift to electric vehicles (EVs) at Porsche. It warned lower sales to the US will cost the company €5bn in lost revenues each year.

The Wolfsburg-headquartered manufacturer added that it now planned to push ahead with job cuts in its efforts to offset losses from Mr Trump’s trade levies.

Arno Antlitz, Volkswagen’s chief financial officer, said: “Increased trading tariffs and the resulting negative volume effects burden us by up to €5bn on a full-year basis.

“Those effects will continue to persist – and that is why we must rigorously implement the performance programmes in place, push forward efficiency measures and develop new approaches.”

Mr Trump imposed 15pc tariffs on cars imported from the European Union into the US in August. Volkswagen, which is the EU’s biggest carmaker, is heavily exposed as it makes most of its vehicles in Europe.

Sweeping job cuts

Volkswagen, which employs over 650,000 workers worldwide, outlined plans for a sweeping overhaul of its business last year that will see it lay off 35,000 of its German staff over the next five years, in a push to make €4bn in annual savings.

The restructuring plans will see the industrial giant slash production by roughly 700,000 vehicles a year, and move production of its iconic VW Golf from Germany to Mexico.

Meanwhile, Volkswagen recorded a €4.7bn hit from Porsche in the third quarter after the luxury carmaker delayed plans to transition towards mainly selling electric vehicles.Porsche’s all-electric Macan. The marque no longer expects 80pc of its line-up to be electric by 2030 - Jens Schlueter/Getty Images

In September, the luxury marque said it would continue producing fossil fuel-powered cars “well into the 2030s”.

Porsche had previously said it expected 80pc of the cars it sold would be battery-powered by 2030. It pinned the change on the slow development of the market for EVs.

The last time Volkswagen posted a quarterly loss was at the start of the Covid-19 pandemic in the second quarter of 2020, when it lost €2.4bn.

The German carmaker also warned that its performance moving forward would depend on securing enough semiconductors, amid uncertainty over crucial supply from Chinese-owned manufacturer Nexperia.

The Dutch government recently took control of a Nexperia factory in the Netherlands over national security concerns, prompting a stand-off with its Chinese owners.

Shares in Volkswagen slipped around 0.9pc in early trade.

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