After the implementation of the U.S. automobile tariffs, it brought a $1.5 billion tariff cost to the German automotive giant Volkswagen. As a result, Volkswagen has proposed a new plan to the White House, considering relocating part of the Audi brand production line to the United States in exchange for tariff reductions.
According to a report by The Wall Street Journal, Volkswagen expressed on Friday (July 25th) its willingness to invest in the U.S., with the condition of reducing import tariffs on automobiles. CEO Oliver Blume stated that this is an “expandable plan” contingent on the U.S. response. In the proposal, Volkswagen advocates for every dollar invested to correspond to a dollar reduction in tariffs.
The Trump administration has been imposing a 27.5% tariff on automobiles since April (including the original 2.5% tariff) in addition to component tariffs. Currently, the U.S. has reached separate tariff reduction agreements with the UK and Japan (10% and 15% respectively), but discussions with the EU are ongoing, with an expected tariff rate acceptance of 15%.
Volkswagen is considering shifting Audi production from Europe and Mexico to the United States, even potentially exporting from the U.S., following the models of Mercedes-Benz and BMW. Blume also revealed that Audi and Porsche will be introducing more “Americanized” car models. Sources told the Journal that Porsche currently has no plans to establish a production plant in the U.S.
To expand in the U.S. market, Volkswagen has invested $2 billion in building a plant in South Carolina, restarting the production of Scout brand pickups and SUVs, and collaborating with the electric vehicle startup Rivian with an investment of over $5 billion. They have also signed a deal with Uber to deploy thousands of self-driving cars in Los Angeles starting from 2026.
In the first half of the year, Volkswagen’s operating profit declined by one-third to €6.7 billion, while revenue remained at around €158 billion. The company stated that €1.3 billion (approximately $1.5 billion) in tariff costs, along with around €700 million for the Audi, Volkswagen Passenger Cars, and Cariad software division restructuring expenses, as well as emission regulation expenditures, have collectively squeezed its profits.
The annual revenue is expected to be similar to last year, with the operating margin being revised down to 4%–5%, lower than the original estimate of 5.5%–6.5%. If the U.S. reduces tariffs to 10%, profits could reach the upper forecast; keeping the current 27.5% could result in the lower limit. CFO Arno Antlitz stated that if the U.S. imposes a 15% tariff on cars from Mexico and the EU, their annual performance would fall into the middle range.