Trump Threatens German Car Companies with 35% US Import Tariff, Carmakers Respond

by Amna El Tawil
 
The incoming president, Donald J. Trump, has warned German car companies they should start producing more vehicles in the United States. If not, they will face a 35% import tariff.
 
Mr. Trump criticized BMW, Daimler, and Volkswagen in remarks in the German newspaper Bild saying: “If you want to build cars in the world, then I wish you all the best. You can build cars for the United States, but for every car that comes to the USA, you will pay 35% tax.”
 

 
He continued: “I would tell BMW that if you are building a factory in Mexico and plan to sell cars to the USA, without a 35 percent tax, then you can forget that.”
 
Reuters reports: “Volkswagen (VW) shares closed down 2.2%, while BMW and Daimler’s shares ended 1.5% lower.
 
Under pressure to deliver on campaign promises to revive U.S. industrial jobs, Trump has turned his fire on carmakers that use low-cost Mexican plants to serve the U.S. market. He has also warned Japan’s Toyota (7203.T) it could be subject to a “big border tax” if it builds its Corolla cars for the U.S. market at a planned factory in Mexico.
 
All three German carmakers have invested heavily in Mexico, but also pointed out on Monday that they manufacturer in the United States as well.
 
BMW executive Peter Schwarzenbauer told reporters the company was sticking to plans to invest around $1 billion in a new plant in Mexico, which is due to go into production in 2019 and create at least 1,500 jobs.”
 
However, German carmakers aren’t going to take these statements so easily. According to Fox Business, BMW is standing by its decision to build a new $1 billion factory in Mexico, saying the facility will supply cars to global markets. BMW also noted that its assembly plant in South Carolina, where the company is spending $1 billion to increase capacity, is now the company’s largest in the world.
 
They said in a statement: “The issue is about commitment and BMW made a significant commitment to the U.S. when it began manufacturing vehicles in America more than 22 years ago.” According to the company statistics, BMW exports 70% of its U.S. production.
 
President of the German Association of the Automotive Industry (VDA), Matthias Wissmann, said in a statement: “For German producers, the United States is not only the second largest export market but also an important production site from which the world market is supplied. One can only warn against the global rampant tendencies towards protectionism. In the end, all nations will be harmed, despite seemingly short-term benefits.”
 


 

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