Europe's biggest carmaker reported operating profit of 2.9 billion euros ($3.3 billion) for the first three months of the year.

Volkswagen AG’s earnings dropped by 40% in the first quarter as higher manufacturing costs cut into margins and US tariffs clouded the German carmaker’s outlook.

Volkswagen said on Wednesday that profit margins this year were likely to be towards the bottom of its guidance range and joined a chorus of automakers warning that U.S. trade policy was making it almost impossible to make financial predictions.