Porsche and Mercedes CEOs Address U.S. Auto Tariff Imposition
In the evolving landscape of US-EU auto trade, two major players, Volkswagen (VW) and Mercedes-Benz, are adapting their strategies to manage the impact of tariffs.
The current EU-USA trade agreement sets a flat 15% tariff on most EU auto exports to the US. While this rate is a reduction from previous Section 232 tariffs, it still presents a significant challenge for automakers. Notably, sectors such as aerospace and certain chemicals remain tariff-exempt, but autos and auto parts are not exempt from the 15% tariff [1][2][3].
Mercedes-Benz is responding to this challenge by leveraging its substantial US domestic production. Models like the GLE-Class and GLS-Class, built in Alabama, account for a large share of their US sales. This domestic production strategy allows Mercedes to absorb the tariff impact and maintain competitive pricing, contrasting with brands like Audi and Jaguar Land Rover that have paused imports or considered price increases [2][4].
Volkswagen Group (VW) is also adjusting its approach. While specific plans are not yet fully disclosed, OEMs including VW have been proactively taking measures such as stockpiling inventory and adjusting supply chains to mitigate tariff impacts [4]. VW's potential plans could include setting up an Audi line in the USA, as well as building a second plant for its US brand Scout [5].
In a separate development, Matthias Müller, former CEO of VW, has suggested a potential solution to reduce future tariff rates. He proposes that if the USA subsidizes every invested dollar by around 15%, the future tariff rate could be significantly reduced [5].
Meanwhile, Mercedes has proposed a quota model for its operations in the USA. This model would allow exports from the USA to offset imports from the EU, potentially providing a balance in the trade relationship [6].
These measures highlight the efforts being made by Mercedes and VW to navigate the current trade environment shaped by the new deal and ongoing tariff regime [1][2][3][4][5]. As the situation continues to evolve, both companies will likely continue to assess market conditions and adapt their logistics and production strategies to minimize tariff costs and supply chain disruptions.
References:
- EU-US trade agreement: what it means for the auto industry
- Mercedes-Benz to absorb tariff cost by boosting US production
- EU-US auto tariff: what's the latest?
- How automakers are adapting to US-EU auto tariffs
- VW's Blume suggests investment subsidies to reduce tariff costs
- Mercedes proposes quota model for US operations
In the realm of finance and business, Mercedes-Benz is addressing the 15% tariff on EU auto exports to the US by increasing domestic production, particularly of models like the GLE-Class and GLS-Class, built in Alabama.
In an bid to potentially reduce future tariff rates, Matthias Müller, former CEO of VW, has suggested a solution involving the USA subsidizing every invested dollar by around 15%.
