Volkswagen CEO meets top US trade official as Mexico tariffs loom: sources

[WASHINGTON] Volkswagen AG chief executive Herbert Diess met on Monday with the top US trade official, a week before new tariffs are set to hit imported Mexican vehicles, two people briefed on the matter said.

Last week, US President Donald Trump said he would begin imposing tariffs on all Mexican made goods starting at 5 per cent on June 10. The tariffs would rise from there, hitting 25 per cent on Oct 1 "unless Mexico substantially stops the illegal inflow of aliens coming through its territory," Mr Trump said.

Mr Diess met with US Trade Representative Robert Lighthizer, the sources said. A spokesman for Lighthizer did not immediately comment.

The tariffs could cause the largest European automaker significant pain.

Mexican made vehicles accounted for nearly half of Volkswagen's US sales last year. The company builds the Jetta and Tiguan among other models at its Puebla, Mexico, plant and builds engines at a plant in Silao. It also assembles the Audi Q5, its best-selling US vehicle accounting for a quarter of sales, at another plant in Mexico.

"We believe that tariffs of this kind are a tax on the US consumer and will result in higher prices and also threaten job growth," VW said in a statement on Monday, adding that the company "has made significant long-term investments in the United States that would be impaired by restrictive changes to trade."

A Volkswagen of America spokesman confirmed Mr Diess was in Washington but declined to confirm his meeting with Lighthizer.

In December, Mr Diess was among a group of senior executives of leading German automakers who were pressed by Mr Trump to expand their investments in the United States.

"The president has a point," Mr Diess said in December, saying officials "tried to convince us to invest more into America and we are prepared to do this."

In January, the German automaker said it was investing US$800 million to build a new electric vehicle at its plant in Chattanooga, Tennessee. VW said it was adding 1,000 jobs at the plant and that electric vehicle production there would begin in 2022.

Mr Diess also said in January that the company was considering building Audi vehicles in the United States but that no decisions had been made.

REUTERS