President-Elect Donald Trump has threatened to impose a hefty border tax on any cars that German manufacturer builds in Mexico, according to a report from Reuters. In an interview with German newspaper Bild, Trump warned that the United States would impose a tax of 35 percent on any vehicles built at their new Mexican plant which were brought across the border for sale.
The border tax threat comes one week after BMW confirmed their commitment to building their new plant in Mexico. According to The Independent, BMW was aware that they might face threats of a new tax from the President-Elect, who made similar threats to General Motors at the beginning of the month. General Motors also manufactures vehicles in Mexico, and Trump took to Twitter to issue his ultimatum.
“General Motors is sending Mexican made model of Chevy Cruze to US car dealers-tax free across border. Make in USA or pay big border tax!”
Ian Robertson, a sales and marketing director with BMW, responded that the firm was “absolutely committed” to its new Mexican plant, and pointed out that not only did BMW build vehicles worldwide, it’s business as usual for the German company to expand their operations as they sell more cars.
“I don’t think there’s any discussion that BMW is not at home in the United States. Yes, we are building a plant in Mexico. Yes, we built a plant in Brazil last year. Yes, we are building plants in other parts of the world as our capacity increases. But that’s part of a normal strategic manufacturing direction.”
According to BMW, the plant in San Luis Potosi, Mexico will build the BMW 3 Series starting from 2019 and is an expansion of existing 3 Series facilities in Germany and China. Trump, however, said that BMW should build their new factory in America, suggesting that it would be “much better” for BMW. He added that Germany was a great car manufacturer, which he said was evidenced by the number of Mercedes Benz vehicles to be seen in New York, but claimed that there was no reciprocity with America because Germans weren’t buying Chevrolets at the same rate.
BMW, meanwhile, noted that they also planned to invest $1 billion in their South Carolina plant, and that BMW is the largest exporter of vehicles from America by value. Another BMW spokesperson said that BMW was “very much at home in the U.S.,” pointing out that they employ some 70,000 Americans.
While German manufacturers appear unmoved, the President-Elect’s threats seem to have hit home with American car companies. Following Trump’s tweet at General Motors, Ford announced that it was stepping back from its plans to build a $1.6 billion, 2,800 job plant in San Luis Potosi, Mexico, and would instead invest an additional $700 million in a Michigan plant, adding 700 jobs. Ford’s chief executive, Mark Fields, said that the decision was made partly due to falling sales, but also as a “vote of confidence” in Trump’s expressed industry policies. Fiat Chrysler also announced its intention to modernize two plants in Ohio and Michigan, at a cost of $1 billion, and move the production of three Jeep models back to America, adding an estimated 2,000 jobs. Chrysler also said that they were considering bringing production of a heavy-duty Dodge Ram truck back from Mexico.
It is also worth mentioning that Trump’s tweet caused an instant hit to GM’s stock prices, which continue to trend downward as of the time of publishing, and that BMW shares have also been on a downward trend since reaffirming their decision to build the Mexico plant.
[Featured Image by Miguel Villagran/Getty Images]