According to three sources close to the talks, the automakers hope a deal can be reached as early as June, in exchange for commitments to make significant investments on U.S. soil.
Strategic investments to convince Washington
The manufacturers want to highlight their contribution to the American economy. Mercedes-Benz plans to assemble the GLC — its flagship SUV — at its Alabama plant starting in 2027. BMW intends to increase production at its Spartanburg plant in South Carolina. As for Volkswagen, its Audi brand also plans local production, even if that decision predates Donald Trump's return to power.
BMW, the largest exporter of vehicles by volume from the U.S., has also lobbied the European Union for a reduction in tariffs on American cars, from 10 to 2.5 percent. Mercedes-Benz, which exports heavily from its U.S. plant, is also strengthening its argument around its manufacturing presence in the country.
Obtaining export credits to offset tariffs
One avenue being explored is to grant German automakers credits for each vehicle exported from the United States. These credits could then be used to reduce the costs associated with tariffs imposed on imports from Europe.
This approach would aim to balance trade and ease commercial tensions. Business daily Handelsblatt was the first to reveal the existence of those negotiations. The three manufacturers officially declined to comment but had previously confirmed regular exchanges with U.S. authorities.
Europe on alert
The European Commission is also seeking to conclude a trade agreement to avoid a tariff escalation. It has asked major European companies to detail their investment plans in the U.S. to strengthen its position in the talks.
But Brussels is also preparing retaliatory measures if negotiations fail. A recently published list of potential targeted products includes vehicles and automotive parts, which represent a significant portion of transatlantic trade.
More pressure for the German auto industry
Already weakened by a stagnant European market and fierce competition, the German automotive industry is now facing additional pressure. Nevertheless, investors have welcomed the news of the talks: BMW shares jumped by 3.3 percent, Mercedes’ by 2.6 percent, and Volkswagen’s briefly climbed by 2.2 percent.
