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.

The carmaker confirmed its guidance for the year, but said tariffs, political uncertainty and geopolitical tensions could pressure its return on sales, cash flows and liquidity.