by German automakers discuss deal with the US
BMW, Mercedes, and Volkswagen are negotiating with the US government regarding a potential trade agreement. According to reports, the deal may involve reducing tariffs for cars produced by German companies on US soil. A decision is expected as early as next month, but it may require significant investments from German manufacturers.
Trade restrictions have already dealt a heavy blow to the German auto industry. For example, BMW loses over $11 million daily due to US tariffs, despite the company having major production facilities in the US. Similar issues affect Mercedes and Volkswagen.
Negotiation details
Discussions revolve around a so-called “export compensation model,” which would allow German automakers to reduce tariffs by exporting vehicles manufactured in the US. As reported:
German automakers will receive credits for cars they export from the US, and these credits can be used to lower tariffs.
Representatives of the automakers already discussed this idea with the US government in April. The initiative received particular support from Republicans in southern states, where key BMW, Mercedes, and Volkswagen plants are located.
For instance, BMW’s plant in South Carolina spans over 8 million square feet and employs 11,000 people. Mercedes in Alabama and Volkswagen in Tennessee are also major employers in their respective regions.
While the specific terms of the deal remain unknown, it is clear that both sides are interested in reaching a compromise. For German companies, this is a matter of preserving market share, while for the US, it is an opportunity to attract additional investments and support local manufacturing. The situation also highlights how globalized the automotive business has become, where even national trade policies can impact thousands of jobs across different countries.
