Impending US punitive tariffs: Poker game for German cars - economy

  • US President Trump could call on "national security" to levy duties on car imports from Germany.
  • The German auto industry points to the high level of investment it has made in the US and the jobs created.
  • If it comes to tariffs, German car exports to the US could almost halve in the long term – a drop of 18 billion euros.

If one still doubted the importance of the German car industry, then he is now wrong. The European car industry and above all the manufacturers Audi, BMW and Mercedes are so powerful that they pose a threat to US national security. This is apparently the view of the US Department of Commerce.

By Sunday evening, it wanted to finalize a test that had been commissioned by US President Donald Trump in May last year. Chancellor Angela Merkel in any case warned in advance the Americans before further action. For the European car industry, the consequences could be severe. It threatens punitive tariffs of 25 percent on car imports. That will depress the sales, reduce the margins of the corporations and probably cost jobs: The US is next to China, the most important single market of premium car makers.

US manufacturers have withdrawn from Europe

For the US president, however, the cars are the biggest symbol of the alleged imbalance in trade between the United States, Europe and Germany in particular. "If you walk through 5th Avenue, everyone has a Mercedes-Benz in front of their house, right?", US cars like Chevrolets, however, hardly see lamented Trump two years ago.

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Since then, he has repeatedly talked about the "one-way street" in trade: the value of European car and car parts shipments to the US was recently estimated by the EU Commission at more than 50 billion euros per year. US exports, on the other hand, are also suffering from the withdrawal of most US manufacturers from Europe, such as General Motors since the sale of its subsidiary Opel.

The largest BMW plant in the world is in South Carolina

Now 90 days Trump has time to pass customs regulations. 90 days, on which in turn the Germans put. "It will continue with the negotiations," said one weekend, who is close to the haggling: "It's a poker game, because no one should lose his nerve." The main interest of Trump is: to create as many jobs in the US. However, that will be much more difficult if duties are imposed. The German auto industry wants to explain this to the president again, in coordination with the European Commission.

Because the Germans not only earn money through car sales in the US, they have also created many jobs. Chancellor Angela Merkel also referred to this on Saturday at the Munich Security Conference: The largest BMW plant is not in Germany, but in South Carolina, and from there vehicles would be delivered to China, she said. "If these cars are suddenly a threat to US national security, it scares us."