German Carmakers Threatened by Trump with U.S. Import Tariff of 35%

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As President-elect Donald Trump warned that border tax of 35% will be imposed on imported vehicles from abroad to U.S. market, shares in German carmakers Volkswagen, Daimler and BMW fell. These carmakers have invested hugely in the factories in Mexico, with an aim of exporting smaller vehicles into U.S. market, the production costs there being lower than that of United States. In an interview, published on Monday, with a German newspaper, Bild, Trump made a sharp criticism on German carmakers that they fail in production of more cars on the soil of United States.

In remarks, translated into German, Trump said that he wishes all the luck to German carmakers to build cars all over the world but if they wish to export cars to U.S. then they would have to pay 35% tax for each car. He also added that German carmakers would instead have to erect plants in the United States saying BMW that they can forget the idea of selling cars in U.S. if they build a factory in Mexico and don’t pay 35% tax.

Already Mercedes Benz and BMW have huge factories in U.S. building (SUVs) sports utility vehicles of high-margin. BMW shares were 0.87 percent down, Daimler lower by 1.54 percent and shares of Volkswagen were trading lower by 1.07 percent shortly in Frankfurt in early trading. A BMW spokeswoman said that production of BMW 3 series will commence from 2019 in San Luis Potosi, central Mexican city, by a BMW group plant with the intended output for world market. The plant in Mexico is considered to be an addition to production facilities of existing 3 series in China and Germany.

Breaking ground on plant, BMW in June previous year, pledged on investing $2.2 billion for production of 150,000 cars annually by 2019 in Mexico. Trump noted Mercedes Benz cars to be New York’s frequent sight but at the same time claimed about not being enough reciprocity between them stating that Germans weren’t buying Chevrolets with the same rate making business relationship unfair and one-way street. There was a sharp fall of Chevrolet sales in Europe as General Motors, the parent company, in 2013 said that they would drop Chevrolet brand by 2015 end in Europe, focusing instead on promotion of its Vauxhall and Opel marques.

About Abhishek Budholiya 46 Articles
Abhishek Budholiya is a tech blogger, digital marketing pro, and has contributed to numerous tech magazines. Currently, as a technology and digital branding consultant with Future Market Insights, he offers his analysis on the tech market research landscape. His forte is analysing the commercial viability of a new breakthrough, a trait you can see in his writing. When he is not ruminating about the tech world, he can be found playing table tennis or hanging out with his friends.