By Stephen Wilmot

Volkswagen has delivered a reminder that Donald Trump's 25% auto tariff is still in place-and already starting to bite.

An hour after the U.S. President announced his decision to pause reciprocal tariffs on Wednesday, the German auto giant said it would report its lowest quarterly profit since the 2021 semiconductor shortage.

One reason: writedowns on the value of vehicles in transit resulting from Trump's auto tariffs, which came into effect on April 3 and aren't affected by the President's latest switcheroo.

Together with adjustments to provisions for its decade-old diesel scandal, the vehicle writedowns cost the company roughly EUR300 million in the quarter ending 31 March, equivalent to $330 million.

VW also announced provisions of EUR600 million relating to Europe's regulations for carbon-dioxide emissions, even though the rules were recently relaxed and the company doubled its European electric-vehicle sales in the first quarter. VW is the European leader in EVs, ahead of Tesla, but like other incumbent carmakers it struggles to make them profitably.

Overall, the German carmaker expects to report operating profit of EUR2.8 billion for the first quarter, almost a third lower than analyst forecasts and equating to a margin of just 3.6%. Full results are due on April 30.

VW's preference shares-the company stock typically traded by European fund managers-rose around 4% as European markets caught up with Wednesday's historic U.S. rally.

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April 10, 2025 05:35 ET (09:35 GMT)

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