Germany’s auto industry—a pillar of its economy—faces severe strain from U.S. trade policies. Audi’s H1 2025 financial report, released July 28, reveals a 37.5% year-on-year drop in net profit to €1.346 billion, with U.S. tariffs directly costing the company €600 million.
Key Impacts:
- 📉 Audi’s global deliveries fell ~6% amid tariff pressures.
- 💸 Parent company Volkswagen Group reported a 33% operating profit decline, citing €1.3 billion in additional tariff costs.
- 💰 Cash flow crisis: Germany’s top 3 automakers could lose €10 billion in collective cash flow in 2025 (per Financial Times):
- Mercedes-Benz: ↓€9.4B → €3.0B
- Volkswagen: ↓€7.1B → €3.3B
- BMW: ↓€4.8B → €4.4B
New U.S.-EU Deal Offers Minimal Relief:
While the July 27 agreement reduces auto tariffs from 25% to 15%, it maintains 50% duties on steel and aluminum. Suppliers are already passing these costs to automakers, squeezing profit margins further.
Industry Reaction:
Hildegard Müller, President of Germany’s Automotive Industry Association (VDA):
“This is a massive burden for German industry, especially automakers. The deal brings only slight improvement—we’ll still bear billions in costs. Tariffs paid since April may decrease, but the structural damage remains.”
Why This Matters
- Transformation costs compound pain: Audi CFO Jürgen Rittersberger noted tariffs coincide with heavy EV/tech investments.
- Transatlantic tension persists: The 15% auto tariff remains triple the pre-trade-war level (5%).
- European countermeasures pending: EU officials warn of retaliatory tariffs if U.S. policies don’t ease by 2026.
*Data sources: Audi AG / Volkswagen Group H1 2025 reports, VDA, FT analysis.*
*Exchange rate: €1 = $1.09