The move comes after German companies have already announced plans to expand their U.S. operations as sales projections in North America exceed those at home. Carmakers have been hinting for more than a year that they planned to shift key parts to the U.S., and the chief executive officers from Volkswagen, Daimler and BMW AG attended a meeting at the White House last November to discuss a new trade deal.
Volkswagen plans to invest $800 million at its only U.S. vehicle factory located in Chattanooga, Tennessee, which will create at least 1,000 new jobs. Daimler, the maker of Mercedes-Benz luxury cars, has earmarked $1 billion on investments to expand vehicle manufacturing at its Tuscaloosa factory in Alabama, which will add more than 600 jobs.
Some German carmakers have also touted their willingness to comply with the U.S.-Mexico-Canada Agreement, the people said, which was signed by Trump and his counterparts a year ago and is still awaiting approval from the U.S. Congress. The new accord would require that 40% of auto content come from high-wage plants, which would effectively force more production to the U.S.
The carmakers, however, don’t plan to move engine production to the U.S., according to the people.
“The new free trade agreement USMCA is currently still in ratification,” according to an emailed statement from BMW. “In accordance with the stipulations, the BMW Group will examine its plans.”
Bourbon, Motorcycles and Whiskey
Last year, Trump infuriated European leaders by declaring American imports of steel and aluminum a security threat and imposing levies of 25% and 10%, respectively, on shipments from around the world, including the EU. That prompted the bloc to retaliate with tariffs on American goods such as Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey.
U.S. tariffs on European cars and auto parts would mark a significant escalation of transatlantic tensions because the value of EU automotive exports to the American market is about 10 times greater than that of the bloc’s steel and aluminum exports combined. As a result, European retaliatory duties would target a bigger amount of U.S. exports to Europe.
The Trump administration has reached separate agreements with other foreign auto-producing nations like Mexico, Canada and Japan to prevent the U.S. from imposing tariffs on their imported vehicles.
This article provided by Bloomberg News.