US promises tariff relief in talks with Audi on Georgia plant, sources say

US Promises Tariff Relief to Audi for Multibillion-Dollar Georgia Plant Investment

By David Shepardson and Christina Amann

Tariff Relief and Audi’s Investment in Georgia

WASHINGTON, Oct 29 (Reuters) - US President Donald Trump's administration has promised tariff relief to Volkswagen's luxury unit Audi to help secure its $4 billion assembly plant in Georgia, two sources briefed on the matter told Reuters.

Details of the Tariff Relief Program

US officials told Audi executives the government plans to offer a broad tariff relief program for automakers making significant investments in US production, the sources said, speaking on  condition of anonymity because the talks were private.  

The Wall Street Journal reported details of the plan earlier.

Negotiations on Tariff Rates

The two sources briefed on the matter said Audi has pushed the US to cut the 15% tariffs it pays on imports from the EU to 7.5% but that the US Commerce Department was expected to agree to around 10%. 

Broader Implications for Automakers

The tariff relief program, details of which could be unveiled in the coming weeks, aims to prod more automakers to add US production. Other announced US investments by automakers would also qualify, the sources added.

 The Commerce Department did not immediately comment. Audi declined comment. 

Audi’s Commitment and Political Context

Announcement at Georgia Rally

Audi Chief Executive Gernot Doellner stood alongside Trump on Sunday at a campaign rally in Georgia where the US president said the automaker planned to build an assembly plant that will produce 200,000 SUVs annually.

Statement from Audi’s CEO

"This decision was preceded ​by many months of careful planning and intense negotiations," Doellner said. "If the American president invites you, you accept the invitation. ​That is what respect for the office and for the country in which we invest demands."

Approval Process and European Impact

Volkswagen's supervisory board must make a final decision on the investment for it to go ahead.

In Germany, the tariffs have added to the ​pressures on European industry and tension between Volkswagen management and workers, who face job cuts and possible plant closures.

Economic Impact of Tariffs

Costs to Audi

Trump's tariffs on autos, steel, aluminum and parts cost Audi around €1.2 billion ($1.4 billion) last year as it imports all its vehicles for the US market from Europe or Mexico, Audi has said.

Criticism and Effects in the US

Critics of the tariffs say they have also been damaging in the US, where ​they have increased vehicle prices and delayed some automaker investments.

Future Plans for the Georgia Plant

Audi said the investment will create approximately 4,500 jobs. Construction is ​scheduled to begin next year, with production starting in the early 2030s, Audi said.

(Reporting by David Shepardson and Christina Amann; Editing by Sanjeev Miglani)