The German carmaker is already contending with a sales slowdown, high costs, and competition from cheaper Chinese competitors.
Volkswagen has warned against the “harmful economic impact” of tariffs that could be introduced by US President Donald Trump during his second term in office.
The firm highlighted particular unease over levies on goods coming from Mexico, where Volkswagen holds a major factory.
“The Volkswagen Group is concerned about the harmful economic impact that proposed tariffs by the US administration will have on American consumers and the international automotive industry,” a VW spokesperson said in an emailed statement to Reuters.
During his inaugural address on Monday, the new US president claimed that he would “tariff and tax foreign countries to enrich our citizens” – reiterating messages delivered on the campaign trail.
Trump has proposed import duties of 25% on Mexico and Canada, as well as 10% on global imports and 60% on Chinese goods.
Tariffs on Mexico – as well as on Canada – could arrive on 1 February, according to the US President.
This is despite the fact that Canada, the US and Mexico manage to solidify a trilateral free trade deal during Trump’s first term in office.
The new president believes that tariffs can be used to favour US goods and therefore grow the economy, despite experts’ fears that extra levies will simply raise prices for American buyers.
Trump isn’t VW’s only threat
Volkswagen’s comments come as the car manufacturer is already contending with a series of other challenges, hitting its financial margins.
Tough economic conditions have caused sales to slump in major markets, while the firm is being undercut by cheaper Chinese competitors.
In terms of the transition to electric vehicles, Volkswagen is also lagging behind – not helped by the German government’s decision to scrap buyer subsidies.
The car giant threatened plant closures in its home country last year, although retracted the proposal in December.
Operations in Mexico and the US
Across the pond, Volkswagen’s Puebla factory is Mexico’s largest and one of VW’s biggest sites.
The factory made nearly 350,000 cars in 2023, all for export to the US.
According to Stifel analysts cited by Reuters, 65% of the cars that Volkswagen sells in the US would no longer be competitive if duties were added to Mexican imports.
To underline the importance of its US sites, Volkswagen said it was making total investments of more than $10bn (€9.7bn) in the country.
The funding will be shared between its Chattanooga plant in Tennessee and a joint venture with EV startup Rivian.
The partnership with Rivian is intended to provide VW with cutting-edge electrical architecture and software for EVs.
In the emailed statement to Reuters, Volkswagen stated that it “looks forward to continuing its longstanding and constructive partnership with the US administration”.
A spokesperson said: “We value collaboration and open dialogue.”
Euronews has contacted VW for further comment.
