German carmakers warn of ‘only losers’ in Trump’s trade talk

Germany’s auto industry pushed back on President Donald Trump’s threat to levy tariffs on BMWs, Audis and others cars imported from the European Union, warning that he risks creating a lose-lose situation for everyone.

In the latest tit-for-tat with the European Union, Trump warned over the weekend that he could tax European cars, which “freely pour” into the U.S., creating a “big trade imbalance.” But with more and more German cars made in America, that gap narrowed to about 64,000 vehicles last year as the homeland of MercedesBenz and Porsche ramps up exports from U.S. factories.

“I think the American government knows that in the past we had agreements like NAFTA that shouldn’t just be destroyed on a whim,” Volkswagen CEO Matthias Mueller said in an interview with Bloomberg TV. “We all put our efforts into globalization in the past decades, and I think we shouldn’t give up that idea so easily.”

Germany’s new government is seeking to stand by its auto industry and will make averting a trade war with the US an immediate priority, a top official in Chancellor Angela Merkel’s coalition said. Jens Spahn, the designated health minister, urged Trump to seek a less confrontational path and avoid a vicious circle, signalling that the threat of a trade war has surged to the top of Germany’s agenda.

“In such a trade war, there are only losers, on all sides,” Bernhard Mattes, president of German auto-industry lobby VDA, which represents BMW AG, Volkswagen AG and other German automotive firms, said in a response to Trump’s comments. “We’re watching the current developments with great concern.” Combined, German car factories in the US produced 804,000 vehicles last year, with 430,000 of those exported outside the country.