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Trump: German automakers will pay tariff on cars built outside U.S.

Shares in German carmakers BMW, Daimler and Volkswagen have fallen after Donald Trump warned he will impose a border tax on vehicles imported from abroad. (Video: Reuters)

President-elect Donald Trump threatened German automakers with a hefty import tax if they plan to sell cars in the United States that were built in other countries, repeating a claim that has shaken the global automotive industry and its biggest players at home and abroad.

The latest promise to impose tariffs on imported cars was made to the German newspaper Bild. In a translated interview, the newspaper quoted Trump as 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 percent tax.”

“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,” Trump said.

Reuters translated and reported on the remarks.

Trump has issued similar warnings, via Twitter, to Ford, GM and Toyota. But Reuters reports that the proposition of a tariff has already stoked tensions in Germany, the largest U.S. trading partner in Europe and a key political ally throughout the Obama administration.

German automakers sold approximately 1.3 million vehicles in the United States last year, WardsAuto data show, making up 7.6 percent of all new vehicle sales. The most prominent brands in the United States include BMW, Mercedes-Benz, Volkswagen, Audi and Porsche.

German manufacturers and suppliers increased their production of cars in the United States from 214,000 to 850,000 between 2009 and 2016, according to Matthias Wissmann, head of the German Association of the Automotive Industry. Speaking at the North American International Auto Show in Detroit last week, Wissmann said that 41 percent of those cars are sold in the United States and the rest are exported to other countries.

German automakers employ 33,000 people in the United States and German suppliers count another 77,000, Wissmann said.

The German Association of the Automotive Industry reiterated those figures Monday after Trump’s comments were published. Wissmann said in a statement that it was unclear whether Trump’s tariff threat would turn into actual policy, and whether such a policy would have the political support to pass through Congress.

Like most car manufacturers, German automakers have also expanded production in Mexico, where labor and global trade are cheaper than in the United States.

BMW plans to construct a new plant in Mexico, which is expected to cost $1 billion and employ 1,500 workers. Reuters reports that BMW executive Peter Schwarzenbauer said that project would proceed unchanged.

A spokesman for BMW in North America said the company’s plant in Spartanburg, S.C. is its largest in the world, employing 8,800 people and manufacturing 411,000 vehicles in 2016. The company plans to invest another $1 billion there as it begins production of the BMW X7 sport utility vehicle in 2018.

“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,” said spokesman Kenn Sparks.

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