European Union negotiators are close to reaching a trade agreement with Donald Trump. One of the main issues is the reduction of the 25 percent duty on car imports. Germany's car industry, Europe's largest, is trying to get relief directly from the U.S. president - and this is causing growing irritation among its EU neighbors.

Details

Brussels is ready to sign a temporary framework agreement with Washington, setting "mirror" duties on imports to the U.S. at 10% - the same basic rate previously agreed to by the UK. But the EU cannot expect equal access with London to the U.S. market for steel, cars and other goods subject to sectoral duties, the British Financial Times reported, citing six diplomats.

Germany's automakers are pushing for a deal with the U.S. as soon as possible to get duty relief. But Berlin's efforts to do so are irritating other EU countries - they fear they will have to pay the price, confirms the FT. On the advice of German carmakers, whose top executives have met personally with Trump, Berlin is pushing a scheme that one European Commission official characterized as "delusional". 

The idea is to allow European car companies to import duty-free into the US one car for each car produced and exported from America. BMW and Mercedes-Benz will benefit first of all - they export part of the cars of American assembly back to the EU, notes the FT. Other carmakers, such as those from France and Slovakia, do not have their own plants in the US;

At a July 7 meeting, representatives of several EU countries said the initiative would hit their companies, told the FT three sources. They said the scheme would incentivize the relocation of production to the US - with job losses in the EU. There is strong irritation in the commission and EU countries that the German car industry is undermining the negotiating position, a European diplomat told the publication. On July 9, EU countries are discussing the issue again.

Context

Germany is the largest exporter to the US and is particularly sensitive to duties. The auto industry contributes about 5% of the country's GDP. The European Automobile Manufacturers Association (ACEA) estimates the industry's losses at several million euros a day. German auto exports to the U.S. fell 13% in April and 25% year-on-year in May, reported Reuters, citing data from the German Automobile Industry Association (VDA).

Mercedes-Benz will add its best-selling GLC SUV to the lineup of models produced at its Alabama plant starting in 2027. BMW is considering introducing additional shifts at its Spartanberg facility in the US. Audi, part of the Volkswagen Group, has promised to set up production in the United States, although it claims the plan came before Trump won the election.

BMW, which calls for the European Union to cut duties on cars from the United States from 10 percent to 2.5 percent, is the largest exporter of cars from the United States by value. Mercedes-Benz actively exports from its Alabama auto plant, its main SUV production site. Every second SUV that Mercedes-Benz and BMW produce at their U.S. plants goes overseas. By the companies' own estimates, German automakers account for about 85 percent of all U.S. auto exports by revenue, notes Handelsblatt. 

This article was AI-translated and verified by a human editor

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