Trump threatens 20% tariff on German autos
STUTTGART, Germany — For as long as Donald Trump has been president, he has been threatening to slap tariffs on foreign carmakers to stop flashy German vehicles from “flooding” American streets.
On Friday, he repeated the threat and attached a specific number, tweeting about a 20 percent tariff on all automobile imports from Europe.
“Eighteen months ago, I would never have believed it,” said Uwe Meinhardt, a union official who represents auto workers in a city where nearly one in five employees has a job in the industry.
Now that Trump has made good on other onceseemingly far-fetched threats against European allies, Meinhardt is trying to get used to the idea that his workers may be the U.S. president’s “next victims.”
German auto giant Daimler warned Thursday that the tensions would hurt profits, becoming the first carmaker to do so.
Although auto tariffs Tariffs already taking their toll Page C3
would be aimed broadly at imports, with cars from major manufacturing hubs such as Mexico, Canada and Japan all likely to be affected, Trump has singled out German cars as the object of his ire.
The president has long railed against high-end BMWs, Mercedes and other luxury imports.
“When you walk down Fifth Avenue, everybody has a Mercedes-Benz parked in front of his house,” Trump told the German tabloid Bild just before his inauguration. “How many Chevrolets do you see in Germany? Not many, maybe none … It’s a one-way street.”
Trump suggested Friday that auto tariffs would come in response to European trade practices. He tweeted: “Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and Volkswagens on an assembly line in Germany removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!”
In an interview with public broadcaster ARD, Chancellor Angela Merkel acknowledged the tariffs may be coming and promised Europe would retaliate in kind.
“One can’t take advantage of us again and again,” Merkel warned.
The tough talk is of little comfort here in Stuttgart, where the prospect of a trade war fills residents with dread.
“Every second euro in this region is earned abroad,” said Tassilo Zywietz, a director at Stuttgart’s chamber of commerce who focuses on the region’s heavily export-driven economy. “Targeting the automotive industry would be a stab in our heart.”
The tariffs would knock about $6 billion, or nearly 0.2 percent of GDP, out of the German economy through lost sales and profits on cars imported directly from Germany, according to a study by the Munich-based ifo Center for International Economics.
“Tariffs will cost the German automakers market share. That’s very clear,” said Gabriel Felbermayr, the center’s director.
Their exposure doesn’t end there. About 500,000 cars were exported to the U.S. from German plants located in other countries, such as Mexico, meaning a breakdown of NAFTA could compound the damage.
German manufacturers also export cars made in the United States — BMW boasts it is the largest U.S. auto exporter by value — so they could be caught in the crossfire if the United States and China escalate their spat.
“A trade war is not easy to win,” he said. “Either side will be paying higher costs.”
Mixed in with the concern is also a supreme confidence in the superiority of German engineering.
“People will still buy German cars,” said Andreas Kramski, chief executive of a family business that makes billions of parts annually for auto manufacturers worldwide. “It wouldn’t be very patriotic for an American to say, but it’s a matter of fact: German cars are just better.”