Volkswagen suspends US deliveries due to new trade restrictions

German carmaker Volkswagen has been forced to temporarily halt rail transportation of cars from Mexico to the United States. The reason is new customs duties imposed by Donald Trump’s administration affecting imported products from around the world. This was reported by Automotive News on April 3, citing an internal notice sent to dealerships.

According to Trump’s latest announcement on April 2, a single base tariff of 10% is being imposed on all countries. In some cases, however, the duties will be even higher: shipments from the European Union will be subject to a 20% duty, Mexico and Canada are subject to a 25% levy, and goods from China are subject to a 34% duty. These measures are part of the former president’s sweeping economic strategy to protect American manufacturing.

For Volkswagen, such changes mean a marked increase in costs. Sources say the company plans to pass some of the extra costs on to consumers by including a 25 percent duty in the price of cars. This, in turn, will lead to a noticeable price increase on a number of models.

Today, Volkswagen assembles the ID.4 electric car and the Atlas family of crossovers at its U.S. facility in Tennessee. However, many other models – such as the ID. Buzz and Golf – are imported from Europe, while cars such as the Tiguan, Taos and Jetta come to the US specifically from Mexico, where deliveries have now been jeopardized.

The increased tariffs have hit German automakers particularly hard. Companies like Mercedes-Benz AG and Porsche make significant money in the U.S. market from demand for crossovers and SUVs, which remain popular amid sluggish interest in electric cars in the U.S.. However, the new duties could call into question the economic viability of selling certain models. According to Bloomberg, Mercedes-Benz is already considering not selling its affordable cars in the U.S. – they may prove too unprofitable under the new conditions.

An additional blow to Volkswagen was the news of a fine imposed by the European Commission: a group of automakers, including VW and Stellantis, were found to have been involved in a cartel conspiracy to recycle end-of-life vehicles. The fine exceeded €458 million.

So Volkswagen and other European car companies find themselves under double pressure – from both U.S. trade policy and European regulators. In the coming months, the market can expect a sharp drop in deliveries and higher prices for imported cars.