World's second-largest automaker, Volkswagen Group has made the shock decision to put all US-bound cars on hold after introducing a 25% tariff on all imported models.
The global automaker confirmed it's in a high-stakes holding pattern triggered by President Donald Trump's 25 percent tariff on imported vehicles.
Reacting to the move, a spokesperson for Volkswagen Group criticised the new tariff, warning that it could damage economies worldwide, including in America.
They explained: "We share the assessment of most experts that US tariffs and any counter-tariffs will have negative consequences for growth and prosperity in the US and other economic areas. The entire automotive industry, global supply chains and companies as well as customers will have to bear the negative consequences."
Volkswagen has been producing vehicles in America since 1978 and currently builds several popular models, such as the Atlas SUV and ID.4 electric crossover, in its Tennessee factory.
However, other Volkswagen models, including the Jetta saloon and Tiguan SUV, are made in neighbouring Mexico, while the Golf is imported from Germany. Other brands in the Volkswagen Group, such as Audi, also import their entire range of models from overseas.
As a result, the new import tariff will affect a significant number of Volkswagen models, making them more expensive for consumers to buy.
To demonstrate the cause of the increased prices for consumers, Volkswagen stated that all models sold in America will feature an 'import fee', which will be shown alongside other typical charges, such as road tax and optional extras.
According to a memo sent to car dealers, Volkswagen Group will also freeze shipments to America until further notice, with the company said to have just under three months’ worth of remaining stock.
Executives at the German company are reportedly aiming to persuade the Trump Administration to revise the terms of the tariff.