Volkswagen has paused talks on a possible Audi plant in the US as Trump-era tariffs lift costs and incentive negotiations stall.
The German carmaker has revisited the idea of a second US production base several times since 2018, during Trump’s first presidential term, according to remarks by the CEO Oliver Blume to the German newspaper Handelsblatt, reported Bloomberg.
A proposal on the matter is expected to be outlined in March alongside Volkswagen’s annual results, the report said.
Earlier discussions around building an Audi facility had been driven by subsidy packages that could have made the project financially viable.
That position has shifted since tariffs were imposed on European manufacturers.
In his interview with Handelsblatt, Blume said the duties had cost Volkswagen €2.1bn ($2.49bn) over the first nine months of 2025.
Volkswagen has been trying to strengthen its foothold in the US, where it has struggled to match Toyota Motor and has trailed competitors in the luxury large-SUV segment.
Blume has also moved away from a previous ambition to secure a 10% share of the American market, saying instead that the group would advance “in incremental steps”.
Volkswagen Group held roughly 4% of the US market last year.
The tariff regime has underlined weaknesses for manufacturers dependent on international production networks.
BMW AG and Mercedes-Benz Group both assemble SUVs in the US, while Audi produces models such as the Q5 in Mexico, which does not qualify for duty-free entry.
Volkswagen currently builds VW-branded vehicles in Chattanooga, Tennessee, and is constructing a $2bn plant in South Carolina for off-road vehicles under the revived South Motors nameplate.
Blume said the group had multiple options for a future Audi site and noted that it owns “a large plot of land” in South Carolina, adding that several other states had also shown interest.
According to the report, the company is reassessing its five-year investment programme, which has been reduced to €160bn from €180bn two years ago and covers spending on factories, new models and technologies such as software.
