Volkswagen said Friday that tariffs imposed by U.S. President Donald Trump had cost it 1.3 billion euros ($1.5-billion) in the first half of the year, as it reported falling profit.
Overall net profit fell 38.5% year-over-year during the period to hit 4.48 billion euros, the German auto giant said.
Higher sales of lower-margin electric vehicles (EVs) as well as restructuring costs hit the result in addition to the tariffs, it noted.
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 crisis-hit company 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 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%, down from 5.5% to 6.5% previously, amounting to billions of euros for the firm.
The range assumes that the United States will levy tariffs of 10% on imported cars in the best case and stick to its current rate of 27.5% in the worst, Volkswagen said.
Volkswagen's previous guidance, released in April shortly after new U.S. tariffs took effect, did not take the increased duties into account.
Sales by volume in North America fell 16% "mainly due to tariffs" in the first half even as they rose slightly worldwide, Volkswagen said.
Trump in April slapped an additional 25% levy on imported cars as part of an aggressive trade policy he says will help boost U.S. manufacturing.
That has hit European carmakers. Stellantis -- whose brands include Jeep, Citroen and Fiat -- said on Monday that North American vehicle sales by volume plunged 25% in the second quarter of the year.
U.S. and European Union diplomats are currently negotiating ahead of the latest deadline set by Trump, who has threatened a blanket duty of 30% after Aug. 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 U.S. 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 initially slipped but later rose to stand up more than three percent in morning trading, while the Frankfurt Stock Exchange's main DAX 40 index was down 0.6%.
Metzler bank analyst Pal Skirta said the rise likely reflected Blume telling investors on the earnings call that he saw "positive momentum from 2026 onwards" for Audi and Porsche, two premium brands that have for years struggled with declining sales in China.
