Volkswagen Group has issued a stark warning that plans for a new US manufacturing plant — including a long-anticipated Audi factory — could be abandoned as punitive tariffs imposed under President Donald Trump continue to batter the global auto industry.
Speaking candidly, Volkswagen CEO Oliver Blume revealed that trade barriers have already cost the German carmaker an estimated €2.1 billion in the first three quarters of 2025, sharply eroding profitability and undermining the business case for fresh investments in the United States. Without meaningful tariff reductions, Blume said, committing billions more to new factories is “financially unviable.”
The warning throws uncertainty over one of the most closely watched industrial investments in North America, at a time when automakers are under pressure to localize production, electrify fleets, and absorb rising costs across supply chains.
Blume called for urgent short-term cost relief and, more importantly, predictable and reliable long-term trade conditions, arguing that global manufacturers cannot plan decade-long investments amid volatile tariff regimes. He disclosed that recent talks with the US administration failed to deliver clarity or concessions, further dampening confidence.
The Volkswagen boss also criticized Europe’s asymmetrical tariff response, suggesting that uneven trade policies have left European automakers exposed while doing little to incentivise fair competition.
Reflecting the mounting pressure, Volkswagen has already cut its five-year investment plan from €180 billion to €160 billion, with Blume warning that further reductions are possible ahead of the company’s March financial results. The cuts could affect everything from factory expansion and research spending to the pace of electric vehicle rollouts.
For the global auto industry, Volkswagen’s warning is a signal moment. It underscores how trade wars — once framed as political leverage — now carry real economic consequences, reshaping investment flows, job creation, and the future geography of car manufacturing.
As tariffs bite deeper, the message from Wolfsburg is clear: without stable trade rules, even the world’s biggest automakers will think twice before betting big on America.