Volkswagen has called out President Donald Trump over the 25% tariffs on Mexico and Canada, arguing the policies violate the United States-Mexico-Canada (USMCA) free trade agreement.
The details: VW raised concerns in a comment submitted to the U.S. Trade Representative’s office after the agency asked for feedback (specifically with autos) on technical rules within the USMCA, reports The Detroit News.
In a company letter, VW called the current tariffs on the auto industry (from raw materials through Tier 1 suppliers) “excessive.”
The letter also asserts that investments made by automakers to gain the benefits of USMCA compliance have been “undermined” by the U.S.’s failure to honor the trade agreement.
The Detroit Three automakers took a milder approach to expressing their latest positions on the USMCA to the Trump administration, continuing to stress how critical it is that the agreement be "largely preserved" as is.
What they’re saying: "First, the Section 232 automotive tariffs harm the U.S. auto industry and violate the binding USMCA side letters on automotive trade under Section 232," wrote Volkswagen VP Anna Schneider, referring to a provision of the Trade Expansion Act of 1962 "These letters were negotiated by the first Trump Administration, ratified by Congress, and relied upon by the auto industry."
Why it matters: VW publicly challenging the Trump administration raises the odds of a prolonged, politicized tariff fight, creating fresh uncertainty for VW dealers and other retailers around pricing, incentives, and cross-border supply continuity. If the dispute escalates, dealers could see faster MSRP swings, tighter or uneven allocation, and more cautious consumer demand as shoppers buckle in for price increases.
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Between the lines: VW’s pushback comes as the company faces headwinds in the U.S., amid declining sales and the financial blowback of tariffs on its operations.
The German automaker’s U.S. sales declined 13% in 2025, with the slump accelerating in the fourth quarter, down 19.8% versus the prior Q4.
VW reported a major Q3 hit, posting an operating loss of $5.8 billion and billions more in tariff-related losses.
In July, the company cut its 2025 guidance after taking a $1.5 billion tariff hit in the first half of the year.
Bottom line: Volkswagen’s public challenge to the Trump administration sets up a politically charged tariff fight that could ripple through pricing, incentives, and allocation. The dispute adds new uncertainty to USMCA’s stability and raises the risk of short-term volatility across automakers and their retail networks.
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