Volkswagen flags 'massive' US investments and says tariff talks constructive

BERLIN/FRANKFURT (Reuters) -Volkswagen wants to make more big investments in the United States, CEO Oliver Blume said in an interview with a German newspaper on Friday, adding that tariff talks with the U.S. government were "fair" and "constructive".

Several foreign companies have announced U.S. investments in response to President Donald Trump's import tariffs, but German carmakers have been more cautious about committing more resources to what is their biggest export market.

Volkswagen's Audi brand, which has no production in the United States, is planning to produce some models in there, although the brand has said that the plan pre-dates the Trump administration.

"So far, we have had absolutely fair, constructive discussions," Blume told Sueddeutsche Zeitung. "I was in Washington myself and we have been in regular dialogue ever since."

Blume, who also leads Porsche AG as CEO, said Volkswagen's main contact in Washington was U.S. Commerce Secretary Howard Lutnick, adding he had agreed to keep any details of the discussions confidential.

Sources told Reuters earlier this week that German carmakers including Volkswagen were in talks with Washington over a possible import tariff deal, seeking to use their U.S. investments and exports as leverage to soften any blow.

Trump's trade war has cost companies more than $34 billion in lost sales and higher costs, according to a Reuters analysis of corporate disclosures, with companies pursuing various strategies to cope.

Most of the tariffs were blocked by a U.S. trade court this week, but a federal appeals court has temporarily reinstated them to consider the Trump administration's appeal against the trade court's ruling. The 25% tariff imposed on auto imports earlier this year has not been affected by the rulings.

UNCERTAINTY WORSE THAN TARIFFS

In a recent survey by Germany's Machinery and Equipment Manufacturers Association (VDMA), nearly three quarters of participants said uncertainty over U.S. trade policy had a strong impact on companies' competitiveness, while just 43% said the same for the 10% tariffs slapped on goods from most U.S. trading partners.

"The uncertainty surrounding the U.S. tariffs is causing more problems in our sector than the tariffs themselves," Andrew Adair, VDMA's trade policy adviser for North America, told Reuters.

"Uncertainty causes customers to delay purchasing decisions—including American companies that are motivated to purchase machinery to ramp up their local production."

Asked what Blume was offering in the talks, which aim to reduce the 25% autos levy, he said: "The Volkswagen Group wants to invest further in the USA. We have a growth strategy."

Blume said the Volkswagen Group already employed over 20,000 people directly and over 55,000 people indirectly in the United States, and highlighted a $5.8 billion investment in U.S. company Rivian.

"We would build on this with further, massive investments," Blume said.

Such investments should be factored into any decisions regarding tariffs, added Blume, who said he hoped Brussels and Washington would reach a broad deal for all industries.

Blume declined to say when a deal with Washington could be struck, when asked about BMW CEO Oliver Zipse's assessment that tariffs would likely fall from July.

"Of course, I also want it to happen quickly. But it depends on many factors and I can't promise anything."

(Reporting by Christoph Steitz; Additional reporting by Friederike Heine; Editing by Lincoln Feast, Jane Merriman and Mark Potter)