Donald Trump wants to “wipe German cars off the map,” according to unnamed sources speaking to a German magazine, Yahoo News is reporting. So devastating were the rumors – which haven’t even been verified – that several German car makers saw their stock values plummet.
Unnamed sources, speaking to German magazine Wirtschaftswoche (“Work Week”), said that Trump made the claim back in April when French president Emmanuel Macron made an official state visit to the White House. At the time, Trump supposedly said that he wants to push German cars out of the United States entirely.
At this point, it bears noting that statements from anonymous sources are not always reliable. And indeed, as of this writing, there has been no comment on these rumors from either Macron’s people, Trump’s people, nor anyone in the German auto manufacturing industry.
So Why Does Trump Want To Push Out German Cars?
Supposedly, Trump is upset with the trade imbalance between American cars being sent to Germany vs. German cars coming into the American market. Back in April 2017, Trump called the trade situation an “unfair one-way street.” Germany imported 657,000 vehicles into the U.S. that year. Combined with other German products imported into the U.S., that amounts to a trade deficit of 23.8 billion euros (about $27.8 billion).
How Would He Accomplish That?
Back in April 2017, Trump mentioned 35 percent imports on German cars. However, a more likely scenario would be a 25 percent import tariff. And last week, the Trump administration did, in fact, begin investigating the possibility: the administration began a so-called “Section 232 trade investigation” into European car imports. “Section 232” is the same law that has allowed the current import tariffs on foreign steel and aluminum, on “national security grounds,” that Trump announced earlier this year.
What Would That Mean For The German Auto Industry?
In a word, those tariffs would decimate the German auto industry in the U.S. 90 percent of the “premium” imports sold in the U.S. come from Germany – but it’s not just the luxury makers, such as BMW or Porsche, that would feel the pain. Volkswagen and Audi both manufacture vehicles for the budget-conscious consumer.
The possibility of punishing German automakers comes amid an escalating trade war that began with China and has now extended to Canada and will soon extend to Europe. European Union countries had been exempted from the Trump administration tariffs on aluminum and steel imports, but those exemptions are expiring, and the administration announced this week that those exemptions are coming to an end and will not be renewed.