Germany updates: Volkswagen profits down amid Trump tariffs

Activists on Friday unfurled a rainbow flag on the lawn in front of the Reichstag building in Berlin as a protest against the government's decision not to raise a rainbow flag for Pride, set to take place on Saturday.

According to organizers, the banner measured 400 square meters as the event held speeches and music with some attendees waving rainbow flags on the eve of Christopher Street Day (CSD) — Germany's equivalent to Pride.

The decision against raising the flag for the celebration of CSD was made by Bundestag President Julia Klöckner.

German Chancellor Friedrich Merz of the conservative CDU defended the decision, saying, "The Bundestag is not a circus tent."

The center-left Social Democrats (SPD), the junior partner in the governing coalition, raised the Progressive Pride Flag — an evolution of the classic rainbow flag, incorporating additional colours to represent trans people and queer people of color — for CSD in front of the Willy-Brandt-Haus, the party's headquarters in Berlin. 

The eastern German state of Brandenburg's Interior Minister Rene Wilke on Friday said he was pushing for the return of a Yazidi family recently deported to Iraq, saying the removal may have violated a court order.

The Yazidis are a religious minority that suffered genocide at the hands of the "Islamic State" (IS) militant group in Iraq in 2014, making such deportations particularly contentious.

On Tuesday, 43 people were deported to Iraq on a charter flight from Leipzig to Baghdad. However, contrary to initial claims by the authorities of the participating federal states, the plane was not just filled with single men who were required to leave the country, some of whom had committed crimes in the past. Also on board was the Yazidi family. 

Read more about the story here.

The deputy speaker of the parliament in the southwestern state of Baden-Württemberg has stepped down after admitting he had drawn a swastika on a ballot paper next to the name of a far-right AfD lawmaker.

Center-left Social Democrat (SPD) politician Daniel Born made the transgression during a vote involving two Alternative for Germany (AfD) lawmakers.

Born said he would also step down from the SPD parliamentary group. However, Born stopped short of giving up his seat in parliament. 

Explaining his actions, Born cited deep concern over the far-right AfD and its disruptive conduct during thevote.

Whether marking a swastika on a ballot during a secret vote constitutes a prosecutable crime remains to be determined by investigators and possibly the courts.

Read more about the story here.

Lower interest rates, multi-billion-euro government investment plans and confidence that the European Union (EU) could secure a more favorable US trade deal have all contributed to a cautiously optimistic outlook in Germany's business sector this month.

After the European Central Bank (ECB) left interest rates at 2% on Thursday, German ten-year government bond yields hit their highest in four months on Friday, with ECB President Christine Lagarde suggesting policymakers were less concerned than before about an abrupt slowdown in growth.

Meanwhile, economic data suggests the Eurozone is weathering uncertainty over US tariffs reasonably well, with optimism growing that the EU will be able to secure a trade agreement with the United States at a lower tariff than the 30% threatened by President Donald Trump.

"After good PMI numbers and a positive tone from the ECB, the path towards higher rates is becoming even clearer," commented ING rates strategist Michiel Tukker. "If a trade deal gets signed, we should see rates move up further."

As for the precise impact on Germany, however, ifo President Clemens Fuest remained cautious about the broader outlook, telling the dpa news agency: "The upturn in the German economy remains sluggish."

Similarly, Commerzbank chief economist Jörg Krämer attributed any economic growth next year — estimated at 1.4% — primarily to increased government spending, but bemoaned the lack of a "fundamental reset of economic policy."

Renovations to a key German air force base to make it fit to house new US-designed F-35 fighter jets are set to come in significantly over budget, it was revealed this week.

According to a confidential parliamentary budget document seen by the Reuters news agency, the German Defense Ministry estimates that the retrofitting of the Luftwaffe base at Büchel in the western state of Rhineland-Palatinate will cost around €640 million ($751 million) more than planned.

The reasons for the increased costs are reportedly listed in the document as "general construction prices, additional time cushion [for completion] as well as hitherto unknown US demands."

The German government placed an order for 35 state-of-the-art F-35 fighter jets in 2022 to replace the Luftwaffe's current fleet of Tornados.

But the new aircraft require the airfield at Büchel to be comprehensively renovated and modernized, with all alterations taking place under strict US supervision. All personnel on site must be thoroughly vetted and no Chinese-made chips or steel may be used in construction.

"The compliance with US security guidelines represents a dominant factor in planning and costs," reads the document.

Büchel airbase is of central importance to German defense. Subterranean bunkers beneath the base house US nuclear weapons which, in the event of war, are supposed to be by carried and deployed by German fighter planes.

There were large queues in Berlin on Friday morning ahead of the opening of Germany's first Labubu store.

Hundreds of people waited for hours outside the Alexa shopping center just off Alexanderplatz, some with camping chairs, many with umbrellas to combat the inclement weather.

Designed by Hong Kong artist Kasing Lung, the eight-centimeter (three-inch) dolls have furry bodies, large eyes, sharp teeth, and pointy ears. They have been marketed by Pop Mart since 2019.

Labubu are said to look both cute and scary at the same time and have become worldwide collectors' items, a trend boosted by influencers on social media.

Pop Mart is reportedly planning a total of three stores in Berlin.

US chip manufacturer Intel has abandoned plans to build a factory in the eastern German city of Magdeburg as it battles with heavy losses and job cuts domestically and fresh competition abroad.

After announcing a $2.9-billion (€2.5-billion) second-quarter loss on Thursday, the California-based tech giant confirmed that it would "not be pursuing planned projects in Germany and Poland."

The initial plans had involved the construction of a €30-billion chip production plant in Magdeburg, to be subsidized by the German government to the tune of around €10 billion. However, the plans were put on ice in November, with no specific reason given.

"When you look at the last few months, then Intel's decision isn't that surprising," Sven Schulze (CDU), Economy Minister for the eastern German state of Saxony-Anhalt, told local public broadcaster MDR.

Citing Intel's internal problems and US President Donald Trump's "America first" policy, he said: "Both were bad signs for Intel investment in Europe."

Germany's biggest trade union, IG Metall, said the U-turn was "without doubt a set-back" for the region and called for "new perspectives."

Regional union boss Thorsten Gröger said that Saxony-Anhalt had developed all the infrastructural prerequisites for industrial investments in recent years, "from available spaces to transport connections to qualified personnel."

He warned Berlin not to abandon the region's industrial ambitions and ensure that "the political will remains to maintain manufacturing in the country and actively support new investments."

Meanwhile, Schulze insisted that the negotiations with Intel had at least given Saxony-Anhalt international recognition which could pay off in future.

For the time being, he referred to the decision last week by nearby Dresden chip manufacturer FMC to build a factory in Magdeburg, which he said was an important Plan B.

German automobile giant Volkswagen has posted a sharp drop in second-quarter profits, citing US tariffs, rising production costs and an increase in sales of electric vehicles with a smaller profit margin.

Volkswagen profits dropped to just under €2.3 billion ($2.7 billion) in the second quarter of 2025, a 36.3% decrease on same period last year.

The Wolfsburg-based concern said that its Porsche and Audi subsidiaries had performed particularly poorly and that sales in China were also down, but insisted the drop-off was largely in line with analysts' expectations.

Chief executive Oliver Blume insisted that Volkswagen is operating in an "extremely challenging environment," while finance director Arno Antlitz said the results were actually "at the higher end" of the company's expectations. "But, in the end, what matters is the money which actually lands in the till," he said.

"We've made tangible improvements in design, technology and quality," added Blume. "The order books are well-stocked."

Nevertheless, the firm says it will stick to its restructuring plans which it intends to "implement decisively and accelerate where necessary." Volkswagen is expecting to cut 35,000 jobs by 2030.

A leading Austrian migration researcher has criticized the German government's deportation policies, calling them a "bluff."

"A great deal of effort is achieving very little — all while undermining EU law," said Gerald Knaus, chairman of the European Stability Initiative, in the Friday edition of German finance newspaper Handelsblatt.

Knaus also defended German migration policy under former Chancellor Angela Merkel (CDU) — which has come under severe attack from Merz and his current government.

"Germany had irregular migration under control," he said.

"The core elements of Merkel's policies after 2016 were correct, as shown by the sharp decrease in refugee numbers following the [2016] refugee deal between the European Union and Turkey.

Indeed, Knaus warned that the current government's constant criticism of Merkel, who also headed up conservative-led coalitions, only serves to help the far-right.

"The CDU is running from its own history and talking down its own success," he added. "[Now], every time any crime is committed by a migrant, [the far-right AfD] can claim: the CDU is to blame."

The number of deportations from Germany rose to more than 11,800 in the first half of this year, according to data released by the Interior Ministry.

The figure, provided in response to a parliamentary question from a lawmaker from the far-right Alternative for Germany (AfD) party, represents an increase of over 2,000 on the same period in 2024, during which around 9,500 deportations were carried out.

The new conservative-led German government under Chancellor Friedrich Merz (CDU) has promised a tougher approach to illegal migration, tightening border checks, clamping down on "secondary migration" within the European Union and resuming deportation flights to countries such as Afghanistan and Iraq.

Earlier this month, Interior Minister Alexander Dobrindt (CSU) joined his counterparts from Austria, Denmark, France, the Czech Republic and Poland in calling for a tougher European migration and asylum policy.

"Effective returns are essential for maintaining trust in a balanced European migration policy," the ministers said in a joint statement.

Guten Morgen! Welcome to DW's coverage of developments in Germany on Friday, July 25.

As the weekend approaches, we'll keep you up to date on stories including:

• A rise in deportations from Germany
• A collapse in Volkswagen profits
• Intel abandoning plans for a factory in Magdeburg
• The soaring costs of a German air force base 

And remember: you can recap on yesterday's Germany news here.