VW CEO Says U.S. Tariffs Could Impact Profitability, Cost Them Up To $2.8 Billion

VW CEO Herbert Diess says that his company’s profits in 2019 could be greatly impacted by potential tariffs from the United State to the extent of up to 2.5 billion euros ($2.8 billion), roughly 13% of the automaker’s expected earnings.

“It’s becoming tense once again,” said Diess in an interview with the Financial Times. “You know it’s a pity because we can’t solve it from the car industry. It’s more of a tariffs negotiation between Europe and the United States.”

The estimated $2.8 billion loss was actually calculated by Analysts at London-based Evercore ISI, although Diess went on to agree with the projection, stating: “In the worst-case situation, that would probably be close to the real figure.”

President Donald Trump claims he will impose tariffs on cars coming into the U.S. from the EU if talks between the two do not end with a successful trade deal in place. To make matters worse, a confidential Commerce Department report sent to the president over the weekend could give him wiggle room to threaten Europe with tariffs of up to 25% on imported cars and parts by designating the imports as “a national security threat,” reports Autonews.

Despite having built production facilities in the U.S., German automakers are still at risk from tariffs on cars they export to America from the Old Continent. Right now, the U.S. is the second-largest market in the world for Mercedes and BMW, while the VW Group’s brands have a rich history there as well.

  • pxsupply

    The extra cost with the tariff should they be implemented will be passed on to the consumer. The buyer of the car here will pay that in terms of a price increase from VW and others. Hopefully this will not happen.

    • danno

      Not necessarily. NA car business is very price competitive and consumers are armed with pricing info. VW will have to find a way to make it work, probably by passing along tariff hit to euro or other customers.

      • pxsupply

        Probably not. Their cars here would increase in price. I don’t think VW would get away with a huge price hike in Europe to compensate for American Tariffs. That would be bad business

  • MarkoS

    Quit playing victim and get to the trade table.

    • BGM

      Many confuse free trade and fair trade. Sadly, they’re not the same thing.

  • Liam Paul

    ok well build your cars here in the states that you sell here in the states, why should vw be the only one making money, the one and only thing I will ever agree on with trump, if you sell cars here, build them here too

    • MayTheBestCarWin05

      1. VW has a plant in the US. In Chattanooga TN.
      2. We live in a global economy. Imports and exports are bound to happen.

  • MayTheBestCarWin05

    Getting rid of the chicken tax would give us the Hilux and the Amarok!! I say that’s a fair deal.

  • Daniela Wolf

    Americans whining about the trade conditions they set up…

  • MarketAndChurch

    oh yay my comment awaits approval

  • BGM

    The US has a trade deficit with most (all?) major countries. I know jack about economics but if Germany has an $80B trade surplus with the US it seems to me they have a lot more to lose. If the US manages to bring that down to $50 or $25 or, even better $0B then the US will have won. Fair trade is the name of the game.

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