- BMW, Mercedes, and Volkswagen are reportedly in talks with the U.S. over a trade deal.
- The deal may involve tariff discounts tied to exports of American-built German vehicles.
- A deal could come as early as next month, but it may require significant US investment.
Trade wars rarely end well for anyone involved, and when the crossfire hits the automotive industry, the damage adds up fast. Nowhere is that more evident than in Germany, where the ongoing tariff standoff is racking up some eye-watering costs. According to a new report, BMW is losing a staggering $11.3 (£8.4 / €10) million per day thanks to U.S. tariffs.
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They’re not alone as Mercedes and Volkswagen are also being hit by tariffs, despite all three having sizable plants in the United States. Given the stakes, it comes as little surprise that the automakers are said to be in “intensive talks” with US Secretary of Commerce Howard Lutnick.
More: Trump Just Dropped A Bomb On European Car Imports
According to Handelsblatt, the discussions are focused on an “export offsetting model.” This appears to be focused on weighing imports of cars made in Germany against exports of German cars made in America. This could be appealing to Trump as he’s focused on trade deficits.
Specifics are hazy, but Reuters is reporting “German carmakers would get credits for cars they export from the United States, which could then be deducted from tariffs.” The publication went on to say the automakers are hopeful that a deal can be reached next month, but it could be contingent on large investments in the United States.
White House
Auto execs reportedly presented the idea to President Trump at the White House in April. This meeting was backed by high-profile Republicans from the South, who know how important plants in Spartanburg, South Carolina and Tuscaloosa, Alabama are.
BMW says their 8 million square foot (743,224 square meter) facility employs approximately 11,000 people and has produced over 7 million vehicles. Last year alone, the plant built nearly 400,000 vehicles and roughly 225,000 of them were exported to 120 countries around the world.
Mercedes’ Tuscaloosa plant opened in 1997 and has built roughly four million vehicles since then. It currently builds the GLE, GLS, EQE SUV, and EQS SUV, and it will add the GLC in the near future. It employs roughly 6,000 people and built around 260,000 vehicles last year.
Volkswagen’s Chattanooga plant spans over 3.8 million square feet (353,032 square meters) and builds the Atlas, Atlas Cross Sport, and ID.4. It’s home to approximately 4,500 employees and the facility built 175,000 vehicles in 2023. The company also noted the average employee makes over $60,000 (£44,544 / €53,126) annually, which is higher than the median household income for the area.
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