US promises tariff relief in talks with Audi on Georgia plant, sources say

By David Shepardson and Christina Amann

WASHINGTON, Oct 29 (Reuters) - US President Donald Trump's administration has promised tariff relief to Volkswagen's luxury unit Audi to help secure its $4 billion assembly plant in Georgia, two sources briefed on the matter told Reuters.

US officials told Audi executives the government plans to offer a broad tariff relief program for automakers making significant investments in US production, the sources said, speaking on  condition of anonymity because the talks were private.  

The Wall Street Journal reported details of the plan earlier.

The two sources briefed on the matter said Audi has pushed the US to cut the 15% tariffs it pays on imports from the EU to 7.5% but that the US Commerce Department was expected to agree to around 10%. 

The tariff relief program, details of which could be unveiled in the coming weeks, aims to prod more automakers to add US production. Other announced US investments by automakers would also qualify, the sources added.

 The Commerce Department did not immediately comment. Audi declined comment. 

Audi Chief Executive Gernot Doellner stood alongside Trump on Sunday at a campaign rally in Georgia where the US president said the automaker planned to build an assembly plant that will produce 200,000 SUVs annually.

"This decision was preceded ​by many months of careful planning and intense negotiations," Doellner said. "If the American president invites you, you accept the invitation. ​That is what respect for the office and for the country in which we invest demands."

Volkswagen's supervisory board must make a final decision on the investment for it to go ahead.

In Germany, the tariffs have added to the ​pressures on European industry and tension between Volkswagen management and workers, who face job cuts and possible plant closures.

Trump's tariffs on autos, steel, aluminum and parts cost Audi around €1.2 billion ($1.4 billion) last year as it imports all its vehicles for the US market from Europe or Mexico, Audi has said.

Critics of the tariffs say they have also been damaging in the US, where ​they have increased vehicle prices and delayed some automaker investments.

Audi said the investment will create approximately 4,500 jobs. Construction is ​scheduled to begin next year, with production starting in the early 2030s, Audi said.

(Reporting by David Shepardson and Christina Amann; Editing by Sanjeev Miglani)