Trump guns for German cars

US President Donald Trump has threatened to pursue German carmakers. Photo: AP

INTERNATIONAL – A report that US President Donald Trump has threatened to pursue German carmakers until there are no Mercedes-Benz cars rolling down New York’s Fifth Avenue dented shares in the luxury car manufacturers yesterday.

An excerpt from German magazine Wirtschaftswoche’s article, which cited several unnamed European and US diplomats, but did not include any direct quotes, could not be independently verified, while a US Embassy spokesperson in Berlin referred questions to Washington.

The news and current affairs magazine said Trump had told French President Emmanuel Macron in April that he aimed to push German carmakers out of the US altogether. Macron’s administration in Paris declined to comment on the report.

The Trump administration last week opened a trade investigation into vehicle imports, which could result in a 25percent tariff on cars on the same “national security” grounds Washington used to impose metals duties in March.

This could destroy exports by German carmakers, which control 90percent of the US premium market and are the biggest EU exporters of cars to the US. BMW owns Rolls-Royce, Daimler has Mercedes-Benz, while Volkswagen controls Bentley, Bugatti, Porsche and Audi.

image2018 Mercedes-Benz luxury vehicles are seen at the Mercedes-Benz of Novi auto dealership in Novi, Michigan

Daimler, BMW and Audi declined to comment, and Porsche was not immediately available for comment. BMW shares were trading 0.5percent lower at 9.39am, while Daimler and VW’s shares were down 1percent and 1.6percent respectively, under-performing Germany’s blue-chip DAX.

Trump has railed against German carmakers before, and in early 2017, in an interview with German newspaper Bild, had said he would impose 35percent tariffs on imported cars.

At the time, he called Germany a great car producer but said that the business relationship with the US was an unfair one-way street.

Germany’s car industry association VDA says its members exported 657000 vehicles to North America last year, with total exports of vehicle components, cars, engines, as well as second-hand vehicles totalling 31.2billion (R455.66bn) in 2016. Imports from the US to Germany amounted to 7.4bn, meaning a trade deficit of 23.8bn, the VDA’s latest available figures show. However, German brands also have huge factories in the US, where they built 804000 cars last year, VDA said, providing jobs for US workers.

Berlin has reacted angrily to the US vehicle imports investigation, but the head of Germany’s BDI industry association, Dieter Kempf, yesterday called for prudence in the growing trade tensions between the EU and the US.

If the EU imposes counter- measures, it must expect Trump to come up with further measures, he told Deutschlandfunk radio. EU passenger car imports from the US were worth 6.2bn last year, while the bloc’s US exports topped 37bn, according to Brussels-based industry association ACEA. The threats made to the car sector are part of a bigger trade dispute with the US.

Trump was expected to decide yesterday whether to end an EU exemption from tariffs on US imports of steel and aluminium, a move Germany has warned could lead to a trade war.

But late on Wednesday, talks to avoid a transatlantic trade war showed no sign of a breakthrough.

German Finance Minister Olaf Scholz said there were no signs of a de-escalation and that the EU response to any tariffs must be “clear and strong and smart”.

Trump’s car tariff is a test of Franco-German solidarity, since French carmakers have hardly any US sales, while German carmakers generate up to 30percent of global sales there.

A 25percent tariff would destroy the business case for German carmakers to export to the US, and mean a 4.5bn hit for Germany’s premium manufacturers, analysts at Evercore ISI said.