VW

As the US economy grows, companies around the world are planning on increasing their US production and the new tariffs will accelerate this process. Using Volkswagen as an example. VW is planning on doubling its Tennessee facility’s capacity to 600,000 units per year. VW backed Scout Motors is building a $2 billion EV plant near Columbia, SC. In 2023 VW produced 2 million cars in Germany and only 150,000 per year in the US while exporting 350,000 cars to the US. VW is closing three of its ten VW plants in Germany. Even though Germany has dropped its tariffs on US auto imports the number of exports to Germany will likely not increase since they still have a 19% value added tax (VAT). All European countries have a VAT and until that is resolved exports to Europe will not increase. One of the main reasons to introduce tariffs is to reduce the $1.2 trillion trade deficit. This is accomplished by having foreign companies produce more of the exports here in the US. This avoids the tariffs. Under the new plan the tariffs on import of cars to the US will increase from 2.5% to 15%.