German automotive giant Volkswagen announced that the tariffs imposed by US President Donald Trump cost it €1.3 billion in the first half of the year, reporting a decline in profits.

Total net profit fell by 38.5% year-on-year during the period, reaching €7.28 billion, AFP reported.

Higher sales of lower-margin electric vehicles and restructuring costs affected the result in addition to the tariffs, Volkswagen said.

Chief Financial Officer Arno Antlitz said the company was still "on track" and that the results were "at the upper end of expectations" if tariffs and restructuring costs were excluded.

In December last year, the company reached an unprecedented agreement with unions to cut 35,000 jobs in Germany by 2030 as part of plans to save €15 billion a year.

The group, which owns 10 car brands, also lowered its revenue and profit forecasts, warning of "political uncertainty and increased trade barriers" for the rest of the year.

It now forecasts a profit for the year of between 4% and 5%, down from its previous forecast of 5.5% to 6.5%, amounting to billions of euros for the company.

The forecast assumes that, in the best-case scenario, the US will continue to impose 10% tariffs on car imports, and in the worst-case scenario, it will stick to the current rate of 27.5%, Volkswagen said.

The company's previous forecasts, published in April shortly after the new tariffs came into effect in the US, did not take the increased rates into account.

Sales volume in North America fell 16% "mainly due to tariffs" in the first half of the year, although globally they rose slightly, the automotive giant said.

In April, Trump imposed an additional 25% tax on car imports as part of an aggressive trade policy that he said would help boost US manufacturing.

This affected European car manufacturers. The French group Stellantis, whose brands include Jeep, Citroën, and Fiat, reported that car sales in North America fell by 25% in volume in the second quarter of the year.

US and EU diplomats are currently negotiating ahead of Trump's deadline, with the Republican threatening a 30% tariff after August 1 if no agreement is reached. | BGNES