Trump to Germany: You bring your cars here, you pay 35 percent tax

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Mercedes-Benzes are produced at Mercedes’ U.S. plant in Tuscaloosa, Alabama, in 2014. Daimler AG

BMW Is America’s Biggest Car Exporter

German auto industry officials are privately expressing frustration with the threats from Trump, noting that they have quadrupled their U.S. automotive production since the beginning of the decade. And about half of the 850,000 vehicles the Germans produced here last year were exported. The BMW plant in Spartanburg, South Carolina, for example, is the sole source for the globally popular X5 model.

“It is surprising that Trump singles out the carmaker that exports more vehicles from the United States than any other manufacturer,” said a report from Evercore ISI. BMW exports about 65 percent of the production from Spartanburg.


Japan Reminds Trump It Has Invested More Than $21 Billion

Japanese manufacturers have expressed similar frustration, noting they have invested tens of billions of dollars in the U.S., broadly expanding their American operations since the country emerged from recession. Honda, for example, produces more than 90 percent of the vehicles it sells in the States in U.S. plants, but it does import a small number of products from the U.S. and Mexico.

Automakers emphasize that operations throughout North America are tightly integrated and are woven into their broader, global manufacturing networks. Shifting production of all models to the U.S. would be difficult to impossible, especially limited-volume products like the Chevrolet Cruze hatchback produced in Mexico. The sedan version of the Cruz, by far the high-volume offering, comes from a factory in Ohio.


Scrubbing NAFTA Could Cost the U.S. Auto Industry 30,000 Jobs

If new trade barriers go up, analyst Dave Cole, director-emeritus of the Center for Automotive Research, or CAR, in Ann Arbor, Michigan, warns it would result in “lower choice for consumers and higher prices.” CAR last week issued a report noting that because the U.S. also ships cars and car parts to Mexico, the proposed restrictions would actually cost about 31,000 jobs.

What About Canada?

That report may soften support for rethinking the North American Free Trade Agreement by the United Auto Workers Union. Though the UAW supported Trump’s opponent, Hillary Clinton, during the presidential election, it subsequently announced it would support efforts to change or abandon NAFTA. But the threat of losing, rather than gaining jobs, has not been lost on union officials in the U.S. or Canada.

“He’s throwing grenades everywhere,” Jerry Dias, the head of Unifor, the Canadian autoworkers union, said recently.

All three Detroit automakers operate plants in Canada. Fiat Chrysler Automobiles has the largest presence north of the border in terms of its overall production. That includes the recently updated plant in Windsor, Ontario producing the maker’s critical Chrysler Pacifica minivan. Analysts say it would be difficult to impossible to cost-effectively move production of that people-mover back to the U.S.

Trump recently claimed credit for an announcement this month by FCA that it was going to invest over $1 billion into existing plants in Michigan and Illinois to build light trucks. But the two projects had long been on the books and simply replace slow-selling passenger car models with new pickups and SUVs.

Industry leaders have been looking for ways to get onto the president-elect’s good side of late, even if they don’t actually change production plans. Privately, though, they seethe at the possible impact border restrictions could have and many have questioned why the auto industry is being singled out when the garment industry – notably including various goods bearing the “Trump” label – have not been a target of the president’s derision.

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