Audi sells cars in America and builds none of them here. Every one comes in from Mexico or Europe. Last year the tariff bill on them topped $1 billion. Now Audi plans a $4 billion factory in rural Georgia. Friday's Journal reports that the deal came with a promise. The administration would ease tariffs for carmakers that commit to building in the U.S.
The plant would build 200,000 vehicles a year. President Trump announced it at a campaign rally in Georgia on Saturday, Oct. 24. In recent weeks, Audi's executives had gone to Washington seeking relief from the tariffs, people familiar with the talks said. They came home with a pledge. The Commerce Department would soon start a program to ease tariffs for companies that put money into U.S. plants. Officials are still settling the details. It would likely waive the tariffs on imported cars and parts, or offset part of them. One person said a company would have to commit to start building before the end of next year to qualify.
The Journal reports the plan will likely resemble one Commerce set up for tariffs on polysilicon, the silicon used in most solar panels. Under that program, a solar company sends Commerce a plan to move production into the country. Once the plan is approved, some of its products skip the tariff. Georgia had courted Audi for years, and Audi looked at more than 70 sites before choosing Georgia, its executives have said. Gov. Brian Kemp said he was “a little worried” the deal wouldn't close before he left office. As recently as January, Volkswagen CEO Oliver Blume said the company couldn't pay for a U.S. Audi plant on top of its tariff bill.
What each side says
Supporters call the plant a win for the president's factory policy. Georgia officials call it historic. In Germany, the news angered politicians and union leaders who worry about job cuts there. Volkswagen's supervisory board still has to approve the plan. Half of its seats belong to workers and union representatives. The Journal also notes that tariffs have pushed up the cost of many goods. Rivals BMW and Mercedes-Benz built U.S. plants years ago, so tariffs generally hit them less.
Our read
Cash Flow, M5. We don't hold Volkswagen, BMW or Mercedes-Benz in any model book, so we read this as a story about the price of a car. Look at how the relief would work. It goes to the company, for the cars and parts it imports, in return for a factory promise. Two imported cars could face different tariff bills, depending on whether their maker has a deal. The Journal's report says nothing about lower sticker prices. Audi's U.S. business is losing money, and a break on its bill could go to fixing that first. Business owners should note the shape of the deal, too. A tariff break traded for an investment pledge is a template that could spread.
Here's where this touches your plan, if a new car is in next year's budget. This week, read the window sticker on the model you want. It names the final assembly point and how much of the car's parts come from the U.S. and Canada. Write that next to the out-the-door price, meaning the total with taxes and fees, and the month you plan to buy. Then price one rival that's built here. A relief program that isn't final doesn't change the price in front of you. Waiting on it is no reason to put off a car you need. You dress for today's weather, not next month's forecast. Bring your car budget to your next review and we'll fit it to the plan.