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.