WOLFSBURG, Germany — Hundreds of auto dealers are preparing to lobby in the U.S. Capitol next month in a desperate bid to stop potentially crippling new tariffs on imported vehicles from Europe.
But in a strange twist, a high-ranking Volkswagen Group executive argued that, if the Trump administration's trade dispute with the European Union ultimately persuades Brussels to reduce its tariffs to match the more open U.S. market, the big winners would be German automakers, not Ford Motor, General Motors and Fiat Chrysler Automobiles.
That's because, the executive said, lowering the auto tariffs on vehicles shipped from the U.S. to Europe would allow Volkswagen, BMW and Mercedes-Benz to consolidate crossover/SUV production in North America, where most of those vehicles are sold, and ship them back to Europe as needed cheaper than can be done today.
"The president has a point," said the executive, who is knowledgeable about VW's positions on trade and spoke to Automotive News on condition of anonymity. "The U.S. market is the most open market in the world. A car coming from Europe into the United States pays a 2 percent tariff. But a car coming from the United States into Europe pays a 10 percent tariff. That's not fair."
The American International Automobile Dealers Association is hosting a Washington Fly-In on April 9-10 in the nation's capital for dealers to lobby Congress about the importance of stopping the imposition of tariffs. Dealers say if the Trump administration imposes a 25 percent tariff on European cars, using Section 232 of the Trade Expansion Act of 1962, their businesses would be devastated because U.S. consumers indirectly foot the bill for the tariffs through higher prices.
The U.S. has imposed a 25 percent tariff on imported light trucks since the early 1960s.
Most trade experts are unclear whether the Trump administration would withdraw its threatened tariffs on EU goods if the common market agrees to lower its trade barriers.
But if that happens, the VW executive said, German automakers would be the prime beneficiaries.
"We would be able to consolidate production on those platforms into single plants in the U.S., where most SUVs are sold, increasing efficiency, the VW executive said. "But it wouldn't mean more Ford or General Motors cars on the road in Europe, because the tariffs are not why customers here don't buy American cars. That is because of the size of American cars and the high cost of fuel in Europe."
Michelle Krebs, executive analyst for Autotrader, said she thinks the Trump administration believes the tariffs charged by the EU are the chief reason the Detroit 3 aren't bigger players in Europe. She disagrees.
"The vehicles just aren't right for the European market, by and large," Krebs said. "Certainly, there are exceptions, like the Ford Mustang. If the U.S. levies tariffs, we believe that American consumers would be charged a lot more for vehicles from European automakers, and would have far less choice."