Germany's Carmakers May Have a Bold Plan to Flip the US Tariff Script
German carmakers BMW, Mercedes-Benz, and Volkswagen are reportedly feeling the impact of new car import tariffs imposed by the Trump administration. However, negotiations are reportedly underway with the U.S. government for a new import tariff deal, and German car manufacturers could leverage certain strategies to mitigate the impact of these tariffs.
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German Automakers in Negotiations with the USA
As first reported by the German outlet Handelsblatt, citing three people familiar with the plans, leading brands BMW, Mercedes-Benz, and Volkswagen are reportedly in discussions with the U.S. Department of Commerce for a potential trade agreement. This potential deal is expected to be announced in June.
Accordingly, the proposals highlight carmakers pledging a new wave of investments in the United States and using car exports originating from the U.S. as leverage for negotiating a favorable deal. If successful, the carmakers would want these investments to be recognized as credits, aiming to reduce the levied import tariffs.
Currently, President Trump has imposed a 25% tariff on car imports entering the United States. This represents a significant financial setback for the three German brands, given that the U.S. is their biggest export market.
EU Carmakers' Plans for Expanding US Production Lines
Although these car brands had already expressed interest in investments before the import tariffs were imposed, their specific steps are now becoming clearer.
BMW had already announced plans to boost production at its Spartanburg plant in South Carolina. Meanwhile, Mercedes-Benz confirmed that it will add new models, including the GLC SUV, to its Alabama plant.
Volkswagen has stated that it is in direct talks with President Trump's administration regarding a massive investment. Additionally, the group is planning to manufacture Audi models in the U.S. for the first time.
Beyond the efforts of these individual carmakers, the EU, through the European Commission, continues to negotiate with the U.S. government to end the tariffs, or at least prevent any increases and escalation, which also affect other major products coming from the bloc.
What is your stance on the current trade war? Should EU automakers be compelled to increase their plants and investments in the U.S.? We want to hear your thoughts.
Source: Handelsblatt
