Explainer-Auto winners and losers of proposed EU-US export mechanism

(Reuters) -Brussels is considering pursuing a potential arrangement that would allow European automakers that produce and export cars from the United States to import vehicles from the EU at reduced tariff rates, according to two sources familiar with the matter.

The discussion is part of the European Commission's efforts to broker a trade deal with U.S. President Donald Trump and would replace the hefty 25% tariff on car and car part imports the U.S. administration implemented in April.

This would be a clear positive for those carmakers with major U.S. production facilities, who would be able to use their U.S. production to lower their exposure to tariffs.

This is what a trade deal means for the EU and how individual European automakers would be affected:

WHAT'S AT STAKE FOR EU?

According to data from European auto association ACEA, nearly 758,000 cars worth 38.9 billion euros ($45.55 billion) were exported to the U.S. from Europe in 2024, more than four times as many as in the other direction.

One EU diplomat said cars were a "red line" for the bloc, making a concession on cars a caveat of any deal. However, Brussels and Washington have conflicting goals as Trump wants to revive U.S. auto production while Brussels wants open markets for its sector, which is struggling with high energy costs and competition from China.

WHO STANDS TO WIN?

Germany's BMW and Mercedes-Benz would benefit most from a mechanism counting U.S. exports against imports from the EU, as both companies operate large factories in the United States.

BMW, for example, exported around 225,000 vehicles produced at its Spartanburg, South Carolina, plant in 2024, while it sold around 400,000 autos in the U.S. market. It imported around 175,000 autos from other markets, less than what it exported.

Mercedes-Benz exports around two thirds of the vehicles it makes at its plant in Tuscaloosa, Alabama, or around 170,000 based on 2024 production.

It sold around 324,528 vehicles in the United States last year and imported around 235,000 from other countries.

WHO WOULD BE THE LOSERS?

Volkswagen, Europe's biggest carmaker, would not benefit, as it mostly sells cars produced at its Chattanooga, Tennessee, plant locally rather than exporting them.

An industry source said for that reason, there has also been a push to get Washington to agree to investment credits, which would support foreign automakers' plans to expand to boost local production.

Volkswagen, for example, is currently deciding whether to localise production of its Audi brand - which imports all of its cars into the U.S. market - either via a new factory or expanding existing sites.