Donald Trump just lambasted the German car companies and threatened them with a 35% tariff if they want to sell their products in the US. He told German newspaper Bild on Monday, “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 a 35 percent tax.”
Not content to leave that bombshell lying about, the Trumpenator went on to say, “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.”
As usual, The Donald’s bombastic remarks were nonetheless ambiguous. Was he referring to cars built in Germany or only those built in Mexico? Volkswagen, BMW, and Mercedes all have factories or are planning to build factories in Mexico. What Trump apparently fails to realize is that many of the cars produced in Mexico are sold in world markets other than the US.
He clearly also can’t comprehend that many cars built by German car companies in the US are exported to other countries. BMW builds its X3, X4, X5, and X6 SUV’s in South Carolina and exports about 65% of them to other markets.
German car companies employ about 33,000 workers in the United States and US automotive suppliers to German car companies account for 77,000 more, according to VDA, a German auto industry trade group. “In the long term, the United States would be shooting itself in the foot by imposing tariffs or other trade barriers,” VDA President Matthias Wissmann said in a statement. German car makers have quadrupled light vehicle production in the United States over the past seven years to 850,000 units. More than half of them are exported according to the VDA.
So, can Trump do anything but run his mouth? Apparently so, “The president’s powers are considerable. He can legally impose tariffs of up to 15 percent for 150 days. Trump is not constrained by Congress,” said Simon Evenett, professor of international trade at Switzerland’s University of St Gallen. “Even if foreign companies object and seek to challenge the legality of tariffs, it will take at least 18 months to get decided. Corporate strategies will be disrupted by then.”
German authorities were outraged. Germany’s deputy chancellor and minister for the economy, Sigmar Gabriel, did not mince words. As reported by The Guardian, Gabriel said “The US car industry would have a bad awakening if all the supply parts that aren’t being built in the US were to suddenly come with a 35% tariff. I believe it would make the US car industry weaker, worse and above all more expensive.”
That’s another thing Trump doesn’t understand. Pandering to unemployed white people is all well and good. After all, it won him the election. But will his supporters still be there for him when they realize they are paying more for cars built exclusively in the US? Global trade is a two way street. If Trumpeters really are worried about US jobs, why are they still shopping at Walmart? Is that not a gross inconsistency?
Trump seems to think there is something nefarious going on because Mercedes sells far more cars in the US than Chevrolet sells in Europe. Why is that, he wonders? The answer is simple, Sigmar Gabriel says. “Build better cars.” Ouch!
German chancellor Angela Merkel was embarrassed when George W. Bush gave her a shoulder massage in public years ago. That little show of affection will be nothing compared to what America’s leading sexual predator has in mind for her.