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Trump threatens German carmakers with 35pc import tariff

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FRANKFURT/BERLIN: United States President-elect Donald Trump warned German car companies he would impose a border tax of 35 per cent on vehicles imported to the US market, a plan that drew sharp rebukes from Berlin and hit automakers’ shares.


In an interview with German newspaper Bild, published on Monday, Trump criticised the German carmakers for failing to produce more cars on US soil. “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 per cent tax,” Trump said in remarks translated into German.


“I would tell BMW that if you are building a factory in Mexico and plan to sell cars to the USA, without a 35 per cent tax, then you can forget that,” Trump said.


Volkswagen shares fell 2 per cent, and shares in Daimler and BMW both fell 1.8 per cent by 1033 GMT.


Trump has turned his fire on automakers who manufacture cars in Mexico, a growing production centre where costs are lower.


He has warned Japan’s Toyota it could be subject to a “big border tax” if it builds its Corolla cars for the US market at a planned factory in Mexico.


All three German carmakers have invested heavily in factories in Mexico, with an eye to exporting smaller vehicles to the US market. At the same time, German carmakers have quadrupled light vehicle production in the United States over the past seven years to 850,000 units, more than half of which are exported from there, the German VDA automotive industry association said.


“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.


Speaking in tabloid newspaper Bild, German Economy Minister Sigmar Gabriel said that rather than trying to penalise German carmakers, the US should instead respond by building better and more desirable cars.


Norbert Roettgen, head of Germany’s foreign affairs committee, said Berlin needed to take Trump’s comments on the possible border tax seriously.


“He seems to be absolutely focused on short-term job interests and security interests... not that he is looking for free trade so much, but more for protection,” Roettgen said.


Mercedes-Benz and BMW already have sizeable factories in the United States where they build higher-margin sports utility vehicles (SUVs) for export to Asia and Europe.


Around 65 per cent of BMW’s production from its factory in Spartanburg, South Carolina is exported overseas. BMW builds the X3, X4, X5 and X6 models in the United States. — Reuters


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