Volkswagen is reportedly nearing a significant trade deal with the United States, a move aimed at mitigating the substantial financial burden imposed by Donald Trump-era tariffs. The German automaker's CEO, Oliver Blume, revealed that the levies, coupled with a turbulent market, have already cost the company “several billions” of euros this year. This comes as Volkswagen actively positions itself to capture a significant share of the affordable electric car market in Europe.

Blume emphasized the particular strain on its luxury brand, Porsche, which is being squeezed by a “sandwich” effect of tariffs on its exports to the US and a weakened demand in the Chinese market. While the Trump administration has indicated a willingness to reduce the current 27.5% tariffs on European cars and parts to 15%, Blume stated that even this lower rate would remain a burden for the Volkswagen Group. To secure a more favorable tariff rate, potentially below 15%, Volkswagen has committed to “massive” investments in the US, including considering the localization of Audi production.

The ongoing negotiations highlight the broader disruption within the automotive industry, where global players are grappling with trade protectionism and shifting market dynamics. Volkswagen's proactive engagement with the US government and its strategic focus on the European compact EV segment underscore a multi-pronged approach to navigate these challenges.

Key Context

Trump-Era Tariffs: The US tariffs on European car imports, announced in April, have significantly impacted major automakers, including Volkswagen, Audi, and Porsche.
Sector-Wide Disruption: The automotive industry globally has faced tumultuous conditions, leading to supply chain reconfigurations and re-evaluation of production strategies by companies like Toyota, Honda, Ford, and General Motors, all of whom have reported substantial tariff-related costs.
Porsche's Vulnerability: Porsche, unlike many VW models and rivals BMW and Mercedes-Benz, manufactures almost all US-bound vehicles in Germany, making it highly susceptible to these tariffs. This has led to a 7% drop in Porsche shares and revised profit forecasts.
Asymmetric Deal: VW CEO Blume criticized the current asymmetric trade deal between the US and EU, citing its distorting effect on competition in Europe.