Future of the German Automobile Industry in the United States

On Tuesday, December 4, 2018, Trump received executives from German car manufacturers, Daimler, BMW, and Volkswagen. The official reason for this meeting was to discuss investment opportunities in the United States. But the atmosphere of the meeting was determined by the ongoing U.S.-European trade tensions focused on automobile exports and the threat of tariffs.

 

Trump's protectionism policy envisages putting tariffs on European auto imports. For the automobile industry, the US market is very important. BMW has its biggest plant in the world in Spartanburg, South Carolina and Daimler and Volkswagen also have plants in the southern states. Vice versa, German car manufacturers are important for the US economy as nearly 50,000 Americans are employed in these plants. After Trump announced to impose tariffs on imported cars, BMW revealed that it was considering to open a second manufacturing plant in the United States to help offset the impact of tariffs. Volkswagen and Daimler are also open to new investment opportunities in the United States. Volkswagen is considering a partnership with Ford Motor Company to build VW vehicles at some of Ford's US factories. Daimler boss highlighted the importance of the tariffs' conditions for future investments. Therefore, this meeting is accompanied by the expectations of the executives to avoid the tariffs. After the meeting, Volkswagen chief Herbert Diess said: "We made a big step forward to avoid the tariffs". Also, Daimler chairman Dieter Zetsche revealed an optimistic stance about the meeting in having a positive impact on the tariffs.

 

While the CEO's of the three big German car manufacturers were optimistically discussing investment opportunities in the White House, German Chancellor Angela Merkel clarified that trade diplomacy questions are in the responsibility of the European Commission.

How the ongoing trade tensions and threat of tariffs will be resolved in the future is an open question left for the European Commission. German car manufacturers are looking optimistically into future investment opportunities in the United States but as long as the trade tensions between the European Union and the United States are not solved, the future of the German Automobile Industry in the United States remains unclear.

by: Samira Schakirova, Law Clerk at BHL LLP