Germany hits back at Trump’s protectionist threats

President-elect floated idea of hitting BMW with 35% charge on cars it builds in Mexico

 

Berlin has hit back at Donald Trump’s threat to impose import penalties on German car makers, and suggested the US motor industry would be better served by building better vehicles.

BMW – mentioned by name by Mr Trump in an interview with Bild and the London Times – pointed out it already had a US plant that employed 70,000 people who turned out 411,000 cars in 2016, more than at its main plant in Bavaria.

Mr Trump’s remarks have sparked fresh fears of a transatlantic trade war after the EU and US shelved plans for a new transatlantic trade agreement, in part due to the president-elect’s low opinion of such deals.

German foreign minister Frank-Walter Steinmeier also said he had noted with “concern” Mr Trump’s claim that Nato was “obsolete”.

Berlin officials also dismissed Mr Trump’s description of Chancellor Angela Merkel’s refugee policy as “catastrophic”. Deputy chancellor Sigmar Gabriel suggested the migrant crisis was the result of “faulty, interventionist American policies in the Mediterranean and Middle East”.

Property mogul

The US property mogul complained he saw only German cars on the streets of New York, something he attributed to unfair competition. He floated the idea of responding by hitting BMW of Bavaria with a 35 per cent import charge on cars it built at its plant in Mexico.

BMW could avoid a 35 per cent penalty by building its cars in the US, he added, a move that would be “much better for you and for our efforts”.

Mr Gabriel, the economics minister, said that Mr Trump was misinformed, pointing to the Bavarian company’s US plant in Spartanburg, South Carolina. “The biggest BMW plant is in the US – I’ve visited it,” he said.

Imposing tariffs would leave the US car industry “worse, weaker and more expensive”, he said, given its dependence on foreign-made car parts.

There was a better way than tariffs to boost sales of Chevrolets in Europe, he added. “The US should build better cars,” said Mr Gabriel.

BMW insisted it was “at home in the USA” and that it would continue to operate its third-largest plant in Mexico. Volkswagen operates plants in Mexico and in Chattanooga, Tennessee.

Daimler chairman Dieter Zetsche said he would wait to see what decisions followed Mr Trump’s rhetoric. Asked whether he expected import penalties on foreign-built cars, he told Bild: “I don’t expect so.”

Executives unsettled

Despite outer calm, German car industry executives were unsettled by Mr Trump’s remarks, reflected in a dip in share prices when trading opened in Frankfurt on Monday.

Mr Steinmeier, the foreign minister, said he “expected our US partners to continue to hold to international law obligations and World Trade Organisation rules”.

After a meeting with Nato secretary-general Jens Stoltenberg in Brussels, Mr Steinmeier said Mr Trump’s remarks about the transatlantic defence alliance had caused “surprise and alarm”.

“We have to see what will emerge as a result for American politics,” said Mr Steinmeier.

A Nato spokesman said Mr Trump had made clear his commitment to the alliance in a post-election telephone call with Mr Stoltenberg.