Ever since Donald Trump assumed the office as the US President earlier in January this year, his administration has adopted measures, including introduction of higher reciprocal tariffs, that have unsettled the global automotive industry. With the higher import tariffs in place, European car brands too are the receiving end of the stick.
Audi, the luxury arm of Volkswagen Group, is exploring plans to build a manufacturing plant in the United States as part of efforts to reduce the impact of ongoing trade tensions with the U.S. government. According to a report by Spiegel magazine, the move comes as German automakers face mounting costs from tariffs imposed by the Trump administration.
Audi building plant in USA
Among several options under review, Audi is considering constructing a new plant in the southern United States. Though this option would be the most expensive, internal estimates suggest the investment could reach up to €4 billion ($4.6 billion). The potential facility would strengthen Audi’s presence in a key automotive market and help offset tariffs that have already cost German carmakers hundreds of millions of euros.
An Audi spokesperson told Reuters that the company was currently evaluating various scenarios and expressed confidence that, in consultation with the Volkswagen Group, a decision on the course of action would be made within the year.
Currently, Audi does not operate any manufacturing plants in the United States. However, its parent company Volkswagen operates a production facility in Chattanooga, Tennessee, and is building another near Columbia, South Carolina. Expanding Audi’s production footprint in the U.S. could allow the company to better serve American customers while avoiding additional tariffs on imported vehicles.
German automakers such as BMW, Mercedes-Benz, and Volkswagen are reportedly in talks with U.S. officials, negotiating possible deals on import tariffs. These companies are using their significant U.S. investments and export capabilities as leverage to secure more favorable terms.
With the U.S. remaining a vital market for luxury vehicles, Audi’s potential expansion reflects a growing trend among foreign automakers to localize production in response to shifting global trade policies.
(With inputs from Reuters)
