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- Volkswagen stung by tariffs, but trade deal based on US investments may be coming</p>
<p>Pras SubramanianJuly 25, 2025 at 10:33 PM</p>
<p>German auto giant Volkswagen (VWAGY) is feeling the effects of President Trump's tariff policy. An EU-US trade deal can't come soon enough for the Wolfsburg-based automaker.</p>
<p>Volkswagen reported that its first-half revenue for 2025 came in at 158.4 billion euros ($185.7 billion), essentially in line with last year's figures, but operating result (or operating profit) slid by a third to 6.7 billion euros ($7.86 billion), with tariffs the culprit.</p>
<p>"Decline in Operating Result primarily due to high costs from increased U.S. import tariffs," VW said, noting a figure of 1.3 billion euros ($1.52 billion), with other expenses like restructuring tacking on another 700 million euros ($820.3 million) in profit hits.</p>
<p>"Our half-year figures present a contrasting picture: on the one hand, we achieved strong product success and made progress in realigning the company," Volkswagen CFO Arno Antlitz said in a statement. "On the other, the operating result declined by a third year-on-year — also due to higher sales of lower-margin all-electric models. In addition, increased US import tariffs and restructuring measures had a negative impact."</p>
<p>Though the news was not exactly good, it was likely better than what investors expected, with VW stock pulling higher in Friday trade.</p>
<p>Nevertheless, the results of the first half mean VW slashed its full-year revenue estimate to be in line with last year, from a 5% gain it previously forecast, with the firm's operating return on sales (or operating margin) now seen in the 4% to 5% range from a prior 5.5% to 6.5%. Full-year automotive net cash flow gets chopped nearly in half to 1 billion to 3 billion euros ($1.17 billion to $3.52 billion) from 2 billion to 5 billion euros ($2.34 billion to $5.86 billion).</p>
<p>Read more: How to find the best luxury car insurance</p>
<p>Regarding that guidance, VW said the upper end assumes tariffs will be reduced to 10%, whereas the lower end assumes a 27.5% tariff applies through the second half of the year. "There is high uncertainty about further developments with regard to the tariffs, their impact and any reciprocal effects," the company said.</p>
<p>Reports suggest EU and US negotiators are aiming at a 15% tariff for EU goods coming into the US that would also apply to autos. Currently, the US imposes 25% auto sector tariffs on foreign-made vehicles.</p>
<p>Volkswagen and Porsche CEO Oliver Blume speaks during the annual press conference at the Volkswagen Group headquarters on March 11 in Wolfsburg, Germany. (Julian Stratenschulte/picture alliance via Getty Images) (picture alliance via Getty Images)</p>
<p>"We hope that it will come to a well-balanced deal between the US and the EU, which allows fair trade between the regions," VW CEO Oliver Blume told investors, per Reuters.</p>
<p>Blume also suggested VW may have its own deal with the US government, contingent upon investment in the US.</p>
<p>"We have a very attractive investment package we will do there," Blume said, adding that the company has been in "good discussions" with White House negotiators. Blume indicated investments would come in the form of a "scalable program," without adding more details, though he mentioned the possibility of opening an Audi plant in the US. Currently, Audi builds vehicles for the US market in Europe and Mexico.</p>
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<p>Pras Subramanian is the lead auto reporter for Yahoo Finance. You can follow him on X and on Instagram.</p>
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