Volkswagen is feeling the sting. The German automaker saw its net profit drop sharply in the first half of 2025, plunging nearly 40 percent to 4.47 billion euros compared to 7.28 billion a year earlier. The downturn reflects escalating trade tensions between the United States and Europe, with uncertainty over future tariffs casting a long shadow on the company’s outlook.
The second quarter proved particularly difficult. Profits for the period fell by a third year-over-year, landing at 2.29 billion euros. Revenue also dipped slightly to 158 billion euros, a modest 0.3 percent decline. Volkswagen pointed to the growing strain from trade tariffs, which it says is making long-term planning increasingly difficult.
In light of these pressures, the company is scaling back its expectations for the year. It no longer forecasts a rise in annual revenue for 2025. Instead of the previously expected 5 percent increase, Volkswagen now anticipates flat growth. Profitability projections have also been revised downward, with the operating margin expected to fall between 4 and 5 percent—well below the earlier target range of 5.5 to 6.5 percent.
Volkswagen also highlighted mounting restructuring costs and the financial burden of expanding its electric vehicle lineup—an area that remains less profitable. On top of that, the automaker is grappling with a noticeable slowdown in China, where weaker consumer demand has significantly impacted earnings.
Adding to the pressure, U.S. tariffs are taking a heavier toll. Since early April, imported vehicles not manufactured on American soil have been subject to an additional 25 percent duty. Washington says the move is meant to correct what it sees as an unsustainable trade imbalance. Talks with the European Union have yet to yield results, and if no agreement is reached by August 1, that surcharge could rise to 30 percent—further deepening the sense of economic volatility.
