https://www.reuters.com/business/autos-transportation/volkswagens-cupra-at-risk-planned-eu-tariffs-says-brand-ceo-2024-09-03/

But seriously, they do everything but build compelling and affordable cars.

During COVID they realised they can build only SUVs and sell them for inflated prices and that would be even more lucrative than selling cheaper more affordable and sustainable cars, and now they are surprised why people are not buying their cars.

Mystery, right? /s

as well as their own operations in China

This is the reason. It is not because of their interest in fairness or free market (there is none), but because China is both critical to their production process and a massive market that cannot be ignored. If China retaliates their execs won't be able to buy their tenth yacht.