BMW, VW, and Mercedes-Benz Hope to Cut a Trump Tariff Deal by June: Report
On Thursday morning, the United States Court of International Trade in New York City blocked President Donald Trump's sweeping tariff package, putting a temporary end to the mechanisms of the ongoing trade war that has rattled the automotive industry across the globe. The court stated that it was not the fallout of President Trump's unorthodox implementation of the tariffs, but rather, they "exceed any authority granted to the president … to regulate importation by means of tariffs."
The industry-shaking automotive tariffs were included in the court's ruling, providing at least a temporary reprieve from the 25% tax applied to most imported vehicles. Of course, the Trump administration has already filed to appeal the decision, so automakers are hardly out of the weeds yet. And Germany's big three—the Volkswagen Group, BMW, and Mercedes-Benz—appear well aware of the challenges on the horizon.
That's why executives from all three automakers are set to meet with the U.S. Department of Commerce in an effort to hash out a mutually beneficial deal, according to reporting from Reuters. While all three manufacturers operate factories within the continental U.S., the Trump administration has seemingly deemed these as not enough investment. As a result, a series of anonymous sources told Reuters that these impending discussions will hinge on each automaker's willingness to expand North American manufacturing.
Mercedes is perhaps the closest to appeasing the Trump administration, as the Stuttgart-based automaker plans to expand production at its Alabama plant. Specifically, the GLC-Class SUV will be added to the assembly line, building on the existing production of GLE-Class, GLS-Class and GLE-Class Coupes in Tuscaloosa. BMW's strongest sellers in the U.S., the X-series SUVs, are also built domestically at its Spartanburg, South Carolina, plant — and the automaker is allegedly considering adding extra shifts to increase production. Similarly, the Volkswagen Group has claimed it will bring Audi production stateside by 2027, adding the four-ringed models to production lines in Chattanooga, Tennessee, and South Carolina. All three automakers declined to comment when asked about the upcoming meetings.
The European Commission has been relatively acquiescent in the face of aggressive tariffs and is hoping to steady, if not slash, the level of tariffs encroaching on the 27-nation group from across the Atlantic Ocean. That said, the European Commission has claimed it is ready to strike back should these talks falter. Such offensive action would likely impact German automakers negatively, as BMW and Mercedes-Benz would be subject to tariffs from both ends of the ocean. BMW has previously asked the European Commission to lower the U.S. vehicle import tariff from 10% to 2.5%.
Reuters reports that these talks could result in an expansion of the export credit scheme proposed earlier this year by Commerce Secretary Howard Lutnick. Essentially, foreign automakers producing vehicles in the U.S. would receive credits for cars exported to other countries, which would then be deducted from the import tariffs imposed by the federal government. This deal could be nullified by the court's pausing of the tariff scheme, but analysts say that the Trump administration is especially likely to find other mechanisms to apply levies to the automotive industry.
"If the ruling did remain in place," Deutsche Bank strategist Jim Reid said to The Guardian, "one option for the administration would be to expand the use of other tariff instruments, like the section 232 on national security grounds, which have been used for autos, steel and aluminum tariffs."
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