Industry News: Rumorpile: President Trump Wants To Ban German Vehicle From U.S.

[William Maley]

President Donald Trump is no fan of German automakers. Take for instance this quote from last January,

Quote

“When you walk down Fifth Avenue, everyone has a Mercedes-Benz in front of their house. How many Chevrolets do you see in Germany? Not too many, maybe none at all, you do not see anything over there, it’s a one-way street.”

He has also made comments about BMW in the past few months in light of possible tariffs (which appear to be going into effect today). Now, new comments have been brought to light where the president wants to try and ban German cars from the U.S.

German magazine Wirtschaftswoche reports that during French President Emmanuel Macron's visit to the U.S. in April, Trump said that he will maintain his current trade policy "until no Mercedes models rolled on Fifth Avenue in New York." This information comes from several unnamed European and U.S. diplomats. At the time of this writing, Reuters hasn't able to verify this information.

As we reported last week, the Trump administration has ordered a probe into new car imports on the basis of national security. It may result in imported vehicles being hit with a 25 percent tariff.

Let's suppose that President Trump somehow presents a ban on German cars, trying to get it implemented may be quite problematic .For one, not all vehicles from German automakers will fall under the ban - an example is the Mercedes-Benz G-Class is built in Austria by Magna-Steyr. German automakers also have a sizable production presence in the U.S. Germany’s auto industry association VDA said German automakers built 804,000 vehicles in the U.S. last year.

One thing is for sure; automakers will be dealing with more uncertainty for some time.

Source: Wirtschaftswoche, Reuters

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[G. David Felt]

Yet Potus 45 buys Rolls Royce, owned by BMW. So Supporting Germany as he pounds his Imperial America first drum. ?

I honestly cannot see this really happening as I think he will hit some very hard road blocks. 

It will be interesting to see how MB and BMW respond considering that they import in their performance lines last time I checked, so M and AMG would be the hit points more so than the regular auto lines or as the story points out the G-Wagon.

The world is getting more and more crazy. ?

[Guest potluck]

and there goes the stock market as other countries retaliate

[ccap41]

The idea behind the threat, from my understanding, is to get the tariff on the same level playing field as they tax our cars 10% while we only tax theirs 2.5%, whether it is raising our tariff or getting them to lower theirs.

•  

I think there is zero chance they ban German automobiles.

[smk4565]

4 hours ago, dfelt said:

Yet Potus 45 buys Rolls Royce, owned by BMW. So Supporting Germany as he pounds his Imperial America first drum. ?

I honestly cannot see this really happening as I think he will hit some very hard road blocks. 

It will be interesting to see how MB and BMW respond considering that they import in their performance lines last time I checked, so M and AMG would be the hit points more so than the regular auto lines or as the story points out the G-Wagon.

The world is getting more and more crazy. ?

Exactly, I don't see Trump and his family driving Chevrolets.  Trump has had Rolls Royces for decades and England isn't buying many American cars either, and Rolls is now German owned.

If he puts a tariff on just cars made in Germany, the GLE and GLS are made in the USA, so doesn't affect those Mercedes, BMW builds SUVs in South Carolina, doesn't affect those.   And then what if Mercedes takes Chinese built E-classes and imports them to the USA, and sends the German built E-classes to China.  Is he going to tax all Chinese made cars too?  

 

The major problem here is you have a president that wants to pick winners and losers, which is more like North Korean communism, and not capitalism.  What if the next president decides there should be a 50% sales tax on Trump hotels and a 0% sales tax on Marriott Hotels?  And tries to pick which companies make money and which ones go out of business.  

4 hours ago, ccap41 said:

The idea behind the threat, from my understanding, is to get the tariff on the same level playing field as they tax our cars 10% while we only tax theirs 2.5%, whether it is raising our tariff or getting them to lower theirs.

•  

I think there is zero chance they ban German automobiles.

They could have a 0% tariff on American cars, Europeans aren't buying them because the only good American cars are big trucks that are too thirsty and too large to sell over there.  Likewise for China with the displacement taxes.  If GM wants to make a Malibu with Cadillac CT6 level build quality that gets 55 mpg then game on in international markets, but that current car is hopeless.

[riviera74]

Governments picking winners and losers (otherwise known as industrial policy) seldom works well for markets or consumers.  Too bad Trump never ran a real multinational corporation: at that point he would recognize that free trade and minimal governmental interference on the consumer-facing side are good things to have as policy.

Then again, the GOP rank-and-file probably prefer protectionism (if not autarky), whereas their (former?) leaders and elites actually prefer free trade and NO industrial policy.

[Frisky Dingo]

19 hours ago, ccap41 said:

The idea behind the threat, from my understanding, is to get the tariff on the same level playing field as they tax our cars 10% while we only tax theirs 2.5%, whether it is raising our tariff or getting them to lower theirs.

•  

I think there is zero chance they ban German automobiles.

 

Yes. All these sensationalized pieces and article titles are getting out of control.

 

Nobody in their right would think that the actual goal here is to ban German cars. It's to merely level the playing field in regards to taxes as you pointed out.

[ccap41]

To me, the threat of ban sounds more like he is trying to get our tariff lowered as opposed to raising theirs. IMO, because everybody raising prices doesn't really help but if ours got lowered from 10% to match theirs at 2.5%..1: they would still sell here which is a good thing and 2: our sales to them would likely increase as prices to consumers over there would decrease with a lower tax which would still help our overall economy.

[Drew Dowdell]

2 hours ago, Frisky Dingo said:

 

Yes. All these sensationalized pieces and article titles are getting out of control.

 

Nobody in their right would think that the actual goal here is to ban German cars. It's to merely level the playing field in regards to taxes as you pointed out.

To a degree... but at the same time he doesn't like Chancellor Merkel.  You'll notice it wasn't Korean cars he mentioned wanting to ban.

He is just saber rattling on this, but I don't doubt that he'll enact high tariffs if he doesn't get what he wants.  It will be fairly devastating to the auto industry on both sides of the pond.  Buick in particular would probably die in the US. 

[Robert Hall]

36 minutes ago, Drew Dowdell said:

Buick in particular would probably die in the US. 

This does bring up an interesting thought...with the sale of Opel, I assume future Buicks will be designed in the US and China and no more Opel-derived models (after the current generation models)?  Or does GM have a long term agreement/contract w/ PSA for components and models.. 

Edited June 1, 2018 by Cubical-aka-Moltar

[Drew Dowdell]

8 minutes ago, Cubical-aka-Moltar said:

This does bring up an interesting thought...with the sale of Opel, I assume future Buicks will be designed in the US and China and no more Opel-derived models (after the current generation models)?  Or does GM have a long term agreement/contract w/ PSA for components and models.. 

Of all the American brands on sale in the US, Buick has the highest percentage of models not built in the US. (Buick has 6 models of which only 2 models are built in the US.)

Conversely, the vast bulk of Toyota brand vehicles are built in the US with the RAV4 being the only high volume Toyota model not built in the US. (Corolla, Camry, Avalon, Highlander, Sienna)

[ccap41]

1 hour ago, Drew Dowdell said:

You'll notice it wasn't Korean cars he mentioned wanting to ban.

What's their tariff/tax on our autos to their country? 

[Drew Dowdell]

4 minutes ago, ccap41 said:

What's their tariff/tax on our autos to their country? 

In 2012, South Korea lowered its tariffs on U.S. cars to 4 percent from 8 percent

For reference, the tariff for US cars entering the EU is 10%.  For US cars entering China, it is currently 25% but will drop to 15% on July 1. 

Japan has no import tariff on US cars, however Japanese market tastes are... unique... and American cars aren't suited for that market, so an increase in tariffs on Japanese cars isn't going to balance the trade.

Tariffs for cars imported into the US are 2.5%, and for commercial vehicles, trucks, and 2-door SUVs, the tariff is 25%. This is commonly known as the Chicken Tax.

Regardless of the numbers, I still think it is a personal thing between him and Merkel. 

[Robert Hall]

I do wonder how many US 

6 minutes ago, Drew Dowdell said:

 

Regardless of the numbers, I still think it is a personal thing between him and Merkel. 

Yeah, that wouldn't surprise me...his foreign policy seems to be largely based on personal relations or lack of them..

As far as Japan, Jeep is 'big' there... http://www.thedrive.com/sheetmetal/14782/jeep-is-by-far-the-hottest-american-brand-in-japan