BORDER TAX Automakers Stoic about Trump Threats

German carmakers huddled in Berlin this week to discuss the U.S. president’s threats to impose tariffs. A growing resignation has started to set in – including with the country's transport minister.
Transportation Minister Alexander Dobrindt. Picture source: DPA

When Germany’s automobile lobby held their last annual new year's gathering, the Volkswagen emissions scandal dominated the conversation. This time around, it was hardly mentioned. The German Association of the Automobile Industry now faces bigger challenges in the United States than emissions regulations.

There’s a new president in the world’s second-largest automobile market and his “America first” worldview, backed by threats of a 35-percent border tax, could throw a wrench in works of German automakers, may of whom maintain plants in Mexico.

The automakers huddled in Berlin this week to discuss, as an industry, Donald Trump’s threats for the first time since he delivered his inauguration speech. A stoicism has set in as executives realize that Mr. Trump isn’t likely to back down from his rhetoric.

Globalization is not a one way street. We will have to continue to campaign for free trade. Matthias Wissmann, President, German Association of the Automobile Industry

“Trump should just impose the 35-percent tariff on cars from Mexico then,” said a former Daimler executive. The United States will find out what impact such tariffs really have, the executive said, because the Big Three – Ford, GM and Chrysler – use cheap parts from Mexico.

Others, such as Transportation Minister Alexander Dobrindt, tried to rationalize and play down Mr. Trump’s proposals. Mr. Dobrindt said he doesn’t find the U.S. president’s “America first” principle reprehensible. After all, it’s natural for a politician to “campaign for his own people first,” he said.

But the transportation minister quickly came to the defense of German automakers. Mr. Trump is totally wrong to complain that Mercedes are all over New York while Chevrolet hardly has a presence in Germany, Mr. Dobrindt said. “That’s the free market,” he quipped.

The head of the German Association of the Automobile Industry, Matthias Wissmann, gave a ringing defense of free trade. German automakers produce 5.5 million cars in their home market, Mr. Wissmann said, while they produce 10 million abroad.

“Globalization is not a one way street,” Mr. Wissman said. “We will have to continue to campaign for free trade,” he said.

Some executives preferred not to cross Mr. Trump’s path. Karl-Thomas Neumann, the chief executive of Opel, simply waved off questions about the new president, probably in the hopes of avoiding further trouble.

Mr. Trump, after all, has publicly slammed Opel’s parent company, GM, for exporting Mexican-made vehicles into the U.S. market.