Trump threatens to slap 35% tariff on BMW imports
Republican warns carmaker on Mexico plant and complains Germans do not buy Chevrolets
Donald Trump has threatened German carmaker BMW with a 35 per cent tariff on imports to the US from a new facility in Mexico as he escalated tensions with Europe ahead of his inauguration as US president on Friday.
Mr Trump’s warning, made in an interview with German newspaper Bild, is the latest in a string of attacks on carmakers that manufacture in Mexico, including General Motors and Toyota.
The US president-elect also complained in Bild that Germans do not buy Chevrolets in similar numbers as German brands, such as BMW and Mercedes-Benz.
However, Chevrolet, owned by GM, ceased selling all but a few of its models in Europe in 2015. GM’s European brands Opel and Vauxhall also outsell Germany’s BMW and Mercedes-Benz in Europe.
BMW said on Monday that its new plant will cater “for the world market”, adding that the company “feels right at home in the US”, where it supports more than 70,000 jobs.
Only a few days earlier, BMW board member Ian Robertson said its facility in San Luis Potosi was for global production, and would not need to sell to the US.
“It’s a full-blown operation to produce cars for anywhere in the world,” he said at the annual motor show in Detroit, in anticipation of criticism from Mr Trump.
“The plant is capable of making right-hand drive, left-hand drive, various models, various derivatives, so when we know what we need to know, then we can decide where it goes. We need the capacity anyway.”
When asked if the plant could survive without selling any models to the US, he said “absolutely”.
Separately, when asked what Mr Trump could do to make sure German customers bought more American cars, Germany’s economy minister Sigmar Gabriel said on Monday: “Build better cars.”
He added that the US car market would be worse, weaker and more expensive if tariffs were imposed.
Matthias Wissmann, president of German car industry body VDA, said the US would “shoot itself in the foot” by imposing tariffs on imported cars.
“For the German manufacturers, the United States is not only the second-largest export market, but also an important production base, used to supply the world market,” he said.
BMW’s insistence that it would not need to sell models in the US is highly unusual, with almost all Mexican plants heavily dependent on US sales.
Mexico’s car industry has grown on the back of the North American Free Trade Agreement, which gives it access to the US and Canadian markets.
The country produces 3.3m cars a year, with 82 per cent of its 2.7m exports going to either the US or Canada.
But Mr Trump has called for a renegotiation of Nafta, saying it harms US manufacturing jobs.
Fiat Chrysler chief executive Sergio Marchionne has said it would be too expensive to reconfigure some of the company’s plants in Mexico if they faced tariffs with the US, their main market.
As a result, some facilities may end up closing, he said last week.
But BMW believes it can be more flexible. Its plant will open in 2019 and make 3-series sedans for the global market, coming alongside existing production in Germany and China.
BMW already has a site in the US in Spartanburg, South Carolina, which makes more than 400,000 cars a year including the X5 SUV.
It is the company’s largest plant anywhere in the world, supporting 70,000 jobs, and it is the single biggest exporting plant in the US, according to the group.
“The [US] Department of Commerce is regularly using us as an example of how to export,” said Mr Robertson, adding that the group exported $10bn worth of vehicles a year from the US and is investing a further $1bn into the plant.