Trump's Tariffs Just Cost Volkswagen $1.5 Billion

Andy Kalmowitz / Jalopnik

Good morning! It's Friday, July 25, 2025, and this is The Morning Shift, your regular roundup of nan apical automotive headlines from astir nan world, successful 1 place. This is wherever you'll find nan astir important stories that are shaping nan measurement Americans thrust and get around.

In this morning's edition, Volkswagens grapples pinch a monolithic tariff hit, Kia looks to return advantage of nan business President Trump created, Tesla faces different setback successful Europe and Jeep is recalling complete 120,000 Grand Cherokees. 

It's gonna beryllium a engaged day. Let's get started.

Just dance/Shutterstock

It's not a bully clip to beryllium a Volkswagen legume counter correct now. The German automaker conscionable reported a $1.5 cardinal first-half deed owed to Donald Trump's ill-advised tariff war. It besides trim its full-year income and profit separator forecasts conscionable to adhd reproach to injury.

Europe's biggest automaker now expects this year's operating profit separator to autumn location betwixt 4% and 5% — down from nan 5.5-6.5% that it antecedently forecasted. It besides expects income to stay level compared pinch past twelvemonth alternatively than rising by up to 5%. Ouch. Of course, it's not conscionable tariffs that person done this. Stiffening title from China and a slower-than-expected take of EVs aren't helping matters. 

Volkswagen reported an operating profit of astir $4.6 cardinal successful nan 2nd 4th — down a whopping 29% from nan erstwhile year. That number comes contempt nan truth that VW was capable to boost world deliveries by 1.5% successful nan first half of nan twelvemonth — moreover though it saw a astir 10% diminution successful U.S. deliveries. From Reuters:

CEO Oliver Blume told investors nan institution must intensify its cost-cutting efforts successful consequence to nan tariffs.

"We request to displacement our costs efforts into precocious cogwheel and accelerate implementation. After all, we cannot presume that nan tariff business is only temporary," Blume said.

I cognize this will travel arsenic a shock, but VW and its European title person been pressing difficult for European waste and acquisition negotiations to travel up pinch a woody to trim the 25% tariff they person been dealing pinch since April.

EU diplomats person indicated that nan bloc could beryllium moving towards a wide 15% tariff arsenic it seeks to debar a 30% levy from August 1. A woody struck betwixt nan U.S. and Japan earlier this week raised hopes for a akin statement for Europe, boosting carmakers' shares.

Volkswagen finance main Arno Antlitz said nan company's profit separator would astir onshore successful nan mediate of its guidance pinch a Japan-style deal, which had a 15% tariff rate.

He warned, however, that nan timepiece was ticking connected uncovering a deal. "We are already successful July, truthful nan longer we spell into nan 2nd half of nan year, nan much we thin to nan little extremity of nan guidance," he said.

As of correct now, VW will not opportunity if nan automaker will raise prices to thief offset immoderate of nan tariff charges it's incurring. I don't want to speak for nan company, but I've sewage a sneaking suspicion that it won't support eating these immense losses forever.

JHVEPhoto/Shutterstock

Kia is looking to capitalize connected nan struggles of its competitors arsenic Trump's tariffs ravage nan car industry. The South Korean automaker says it intends to summation its U.S. income and marketplace stock successful nan 2nd half of this twelvemonth by keeping prices down arsenic different rivals look to raise theirs.

Kia said its operating profit successful nan 2nd 4th of this twelvemonth slumped considerably arsenic it took connected a $570 cardinal deed acknowledgment to U.S. tariffs. It warned that a bigger rustle is coming successful nan 2nd half of this year. Still, it was capable to summation Q2 income by 5% arsenic consumers rushed to bargain vehicles earlier tariffs accrued prices. It expects moreover bigger things successful nan 2nd half of nan year.  From Reuters:

It said it aimed to summation its U.S. income by 7% to 8% successful nan 2nd half of nan twelvemonth moreover arsenic wide car income successful nan U.S. marketplace are expected to slump by 10%, starring to a summation successful marketplace stock to complete 6% from 5.1% successful nan first half.

It expects Carnival and K4 mini car income to thrust nan gains while immoderate Japanese automakers are raising prices.

While Kia and Hyundai import astir two-thirds sold successful nan U.S. market, making them much exposed to U.S. tariffs than awesome rivals, Kia said connected Friday that it has not yet made elaborate plans to raise prices, alternatively focusing connected increasing its U.S. business.

"We judge that we will beryllium capable to usage nan difficult situation arsenic a bully opportunity to level up (our marketplace stock and sales), and that's Kia's strength," Kia main financial serviceman Kim Seung-jun said during a convention call.

To lessen nan effect of tariffs, Kia's South Korean factories are going to divert immoderate of their shipments from nan U.S. to different markets for illustration Canada. 

In an effort to springiness customers what they really want, Kia is group to shuffle accumulation astatine its works successful Georgia. It'll now prioritize vehicles for illustration nan Sportage, Sorento and Telluride — shifting its EV accumulation elsewhere.

Kittyfly/Shutterstock

Tesla has been having a very bad 2025 successful Europe, and it conscionable deed different roadblock. The company's efforts to mitigate slumping income connected nan continent pinch gains successful Turkey — 1 of Tesla's fastest-growing markets — are having awesome issues, arsenic it conscionable sewage deed pinch a astonishment taxation hike. From Bloomberg:

Turkey has raised nan lowest tier of its typical depletion taxation for electrical vehicles — which includes Tesla's top-selling Model Y — to 25% from 10%, according to a statesmanlike decree published successful nan country's Official Gazette.

The move adds to challenges facing Tesla CEO Elon Musk, who warned of difficult quarters complete nan adjacent twelvemonth aliases much arsenic nan institution contends pinch nan phase-out of US EV subsidies and slow advancement successful autonomous conveyance development.

Turkey has emerged arsenic an progressively important marketplace for Tesla, helping alleviate falling request elsewhere successful Europe. Musk name-checked nan state during nan company's quarterly net telephone Wednesday.

Tesla income successful nan state soared 171% successful June to 7,235 units, pinch nan Model Y taking nan apical spot among EVs. In aforesaid month, Tesla registrations crossed Europe dropped 23% to 34,781 vehicles, according to information published Thursday by nan European Automobile Manufacturers' Association.

Tesla's occurrence successful Europe has been supported by a section market-specific type of nan Model Y that is designed to suffice for a little taxation bracket. Until now, Turkish customers could bargain nan electrical crossover for nan balanced of $46,100 — nether nan 10% taxation rate. Unfortunately for everyone involved, nan caller levy could push prices up by astir $6,000.

It's not conscionable Tesla that will consciousness nan heat, either. BYD, Volkswagen, Hyundai and Stellantis could each look superior issues successful Turkey because of nan caller tax.

Jonathan Weiss/Shutterstock

Making cars is really hard, and fewer automakers beryllium that mentation amended than Stellantis. The automaker says it is recalling 121,398 2023 and 2024 Jeep Grand Cherokees and Grand Cherokee Ls because nan second-row headrests mightiness not fastener into nan upright position. I don't person to show you why that's bad — because you're really smart — but let's conscionable opportunity it tin summation nan consequence of a superior wounded successful superior types of crashes, according to the National Highway Traffic Safety Administration. From Automotive News:

Only 1 percent of recalled vehicles are expected to person nan defect, NHTSA said successful a July 17 report. Vehicles pinch nan defect were produced from May 16, 2023, to Jan. 30, 2024.

In affected vehicles, nan second-row caput restraints were built pinch an soul locking system pinch an interference information that whitethorn forestall nan headrest from locking upright, NHTSA said.

Owners of impacted vehicles tin sojourn a trader to person nan caput restraint inspected and perchance replaced, NHTSA said. Dealers will beryllium notified July 24 and owners will beryllium notified Sept. 5.

Luckily, it doesn't look for illustration location person been immoderate injuries aliases deaths related to nan defect, but it's ever amended to beryllium safe than sorry.

History.com

I emotion nan thought of a bunch of people music-loving hippies perfectly losing their minds astatine Bob Dylan daring to effort thing new. If you want to publication much astir it, caput complete to History.com.

Who would person thought Jalopnik would outlive Hulk Hogan?