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Trump threatens German car makers with 35% U.S. import tariff

Gonzo Rodeo said:
This is an interesting one. Our Big 3 has about half-again as much market share in the EU as the German Big 3 has here, but the US car market is about half-again larger. And one of our Big 3 is actually British owned to begin with, so there's that.

Given an increase in domestic sales for an equal decrease in European sales, we come out ahead in terms of employment. And our domestic factories have plenty of spare capacity, and there is plenty of competition in the market, so prices likely wouldn't rise.

Plus, the EU would have to make such a decision, not just Germany. But there really aren't any other countries with major car manufacturers in the EU that would feel the heat of retaliation, so they probably would get the vote. Then again, the EU imports a lot of food, so maybe they'd think twice about retaliatory tarrifs.
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none of the big three are british owned....holy crap dude
 
PeteEU said:
I did read the OP and it is irrelevant. Trump is trying to target Mexico if he only puts tariffs on Mexican cars. Any tariff must be universal to work and to be even remotely legal, which means any car made overseas and sold in the US has to have the tariff. Will this happen or is the Furher targeting Mexico because they are dirty illegals?.. Sadly it is more likely the latter.

Does not change the fact that, any company hit by this kind of punishment will have to make a judgement on if the US market is worth the risk. Countries will have to figure out if punishment of US companies is needed, even for those making the product in Europe.
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Spare me the racial straw man argument. BMW is a German company- you know, blond hair, blue eyes. Trump is not targeting Mexico and Mexico has not manufactured cars for several decades.

Rather, Trump is targeting the concept of BMW undercutting US manufacturers by building cars in a third nation whose labor costs are not compatible to the US or Germany. It does not matter whether the nation in question is Mexico, Cambodia, or Nigeria. Of course, BMW chose Mexico for obvious reasons as it is has a well developed infrastructure and is close to the US.

Volvo makes earth moving equipment. So does Catepillar (sp). Any chance that Sweden might get upset if Catepillar manufactured earth moving equipment in Tunisia, then dumped it on the European market?
 
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LessBiased? said:
This simply amounts to punishing Mexico because they're able and willing to provide labor at lower cost, and punishing a non-US company because they choose to lower their cost of production (which benefits US consumers) by shopping for the lowest labor cost. Doesn't sound reasonable to me.
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Mexico is not being punished. BMWs built in Mexico can be sold all over South America, Asia, Africa and the Middle East.
LessBiased? said:
Bottom line is that our American companies and workers need to be competitive with global competition. Conservative principles call for Americans to stop playing the victim and earn what they seek on the basis or hard work and merit. Accept lower wages in order to compete, rather than acting entitled to higher wages which are uncompetitive.
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Very true, and that concept works well with a level playing field. It also works well with a slightly tilted playing field. Catipillar and John Deere both out perform Hyundai in US earth moving equipment sales despite the fact that South Korea has a relatively lower labor costs and thus has an advantage. Such competition is good for US companies and US consumers.

But... the playing field cant be tilted too much. US workers don't need to accept Mexican wages, nor, should they be prepared to accept Guatemalan wages should BMW put a plant there.
 
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RickJames3000 said:
Because I have an education beyond the 9th grade.
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Your 10th grade education isn't impressive, either. You really should throw your Magic 8 Ball with it's canned responses away. Maybe you can kick it up a notch and start repeating what you read on the walls above urinals.
 
humbolt said:
Your 10th grade education isn't impressive, either. You really should throw your Magic 8 Ball with it's canned responses away. Maybe you can kick it up a notch and start repeating what you read on the walls above urinals.
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Anything to offer besides personal insult?
How incredibly lazy of you.
 
Cryptic said:
Very true, and that concept works well with a level playing field. It also works well with a slightly tilted playing field.
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Please tell us specifically how the playing field is unfair for US workers.
 
LessBiased? said:
Please tell us specifically how the playing field is unfair for US workers.
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First realize that there are many different playing fields in the economy. A single playing field simply does not exist.

In the case of cars, BMW manufacturing cars in Mexico (significantly lower labor costs), then selling them here unfairly under cuts US manufacturers. This is not healthy competition for US companies.

Now... BMW manufacturing cars in say, South Korea (slightly lower labor costs), then selling them here at a slight advantage cost wise represents healthy competition as it forces US companies to innovate.

Likewise, John Deere making earth moving equipment in Tunisia (significantly lower labor costs), then undercutting Volvo in Sweden / Europe is not healthy competition for Volvo. John Deere putting a plant in Alabama (slightly lower labor costs), then selling it in Europe is good competition as it forces Volvo to innovate.
 
Cryptic said:
First realize that there are many different playing fields in the economy. A single playing field simply does not exist.

In the case of cars, BMW manufacturing cars in Mexico (significantly lower labor costs), then selling them here unfairly under cuts US manufacturers. This is not healthy competition for US companies.

Now... BMW manufacturing cars in say, South Korea (slightly lower labor costs), then selling them here at a slight advantage cost wise represents healthy competition as it forces US companies to innovate.

Likewise, John Deere making earth moving equipment in Tunisia (significantly lower labor costs), then undercutting Volvo in Sweden / Europe is not healthy competition for Volvo. John Deere putting a plant in Alabama (slightly lower labor costs), then selling it in Europe is good competition as it forces Volvo to innovate.
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If a country is able and willing to provide labor at much lower cost (because there may be a general lack of good job opportunities in those countries), how is that "unfair"? I'm a business owner - if one of my rivals is able to provide the same services at half my cost, I need to either cut my costs to compete or I'll deservedly be forced to go out of business. That's free-market capitalism. Isn't that what conservatives have been espousing before this recent embrace of populist protectionism?
 
LessBiased? said:
If a country is able and willing to provide labor at much lower cost (because there may be a general lack of good job opportunities in those countries), how is that "unfair"?
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The issue of whether or not it is unfair is relative to each party. Each party- even the US is obligated to protect its own interests.
LessBiased? said:
I'm a business owner - if one of my rivals is able to provide the same services at half my cost, I need to either cut my costs to compete or I'll deservedly be forced to go out of business.
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Very true, if one of your rivals, using the same resources as you have access to (in this case labor costs) can under cut you by 50%, you need to go out of business. But... BMW is not using the same labor resources as Ford, They are not even using somewhat similar labor sources cost wise.
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Don't you find it funny that BMW cars produced in Mexico are destined for the US market and not say.... the German market? I mean, would not these cars provide a wonderful competition to German BMW workers? Now, I am sure that BMW can provide a long list of "good" reasons why Mexican produced BMWs cant possibly be sold in Germany.

The real reason, however, is that unfairly (relative to each party) undercutting US manufacturers is good. Shuttering BMW factories in Germany is not good.
 
Cryptic said:
The issue of whether or not it is unfair is relative to each party. Each party- even the US is obligated to protect its own interests.

Very true, if one of your rivals, using the same resources as you have access to (in this case labor costs) can under cut you by 50%, you need to go out of business. But... BMW is not using the same labor resources as Ford, They are not even using somewhat similar labor sources cost wise.
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Don't you find it funny that BMW cars produced in Mexico are destined for the US market and not say.... the German market? I mean, would not these cars provide a wonderful competition to German BMW workers? Now, I am sure that BMW can provide a long list of "good" reasons why Mexican produced BMWs cant possibly be sold in Germany.

The real reason, however, is that unfairly (relative to each party) undercutting US manufacturers is good. Shuttering BMW factories in Germany is not good.
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Protecting interests doesn't mean that what others are doing is "unfair" - and sometimes what's done to protect interests is itself unfair.

According to this article, some of BMW Mexico's output is indeed destined for Europe:

BMW's Mexico plant will have wide range

Again, bottom line IMO is that American workers and companies need to raise their game in order to be competitive in the globalized market, and that may also include taking pay cuts (unions have some blame for preventing this, and thus fostering our lack of competitiveness). Welfare for uncompetitive American workers isn't the answer. If we want America to be the best, we need to actually be the best, rather than just repeatedly asserting it and finding scapegoats to make ourselves feel better.

Trump is inheriting a decent economy which is healing from deep wounds and has been steadily improving for years. He has some good ideas, and generally good intentions, but if he introduces ill-conceived economic policies which damage the economy, that could be tragic.
 
Cryptic said:
Spare me the racial straw man argument. BMW is a German company- you know, blond hair, blue eyes. Trump is not targeting Mexico and Mexico has not manufactured cars for several decades.
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Mexico Car Production | 1999-2017 | Data | Chart | Calendar | Forecast

Err yes they have. Trump is targeting Mexico because he is not threatening the same tax on other countries, who also produce cars and export them to the US... at least not yet.

Rather, Trump is targeting the concept of BMW undercutting US manufacturers by building cars in a third nation whose labor costs are not compatible to the US or Germany. It does not matter whether the nation in question is Mexico, Cambodia, or Nigeria. Of course, BMW chose Mexico for obvious reasons as it is has a well developed infrastructure and is close to the US.
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Irrelevant. The tax wont force the cars to be made in the US. All it does is increase the price for the American consumer. This is a punitive tax that will only hurt the American consumer that wants a BMW. Now the irony is, that the American consumer who wants a BMW is pretty wealthy already, so this tax will mean nothing.... what it is basically, is a tax rise on the wealthy. Funny how that is no?

Volvo makes earth moving equipment. So does Catepillar (sp). Any chance that Sweden might get upset if Catepillar manufactured earth moving equipment in Tunisia, then dumped it on the European market?
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They are already doing that.. in China. Next!
 
katzgar said:
none of the big three are british owned....holy crap dude
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DA60 said:
First, I think you meant one of the Big 3 is owned by Italy, not GB (Fiat). But they are both in the EU - for now.
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PeteEU said:
LOL there is no British owned car manufacture. You are thinking of Chrysler.. that is Italian.
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FCA is headquartered in London, and incorporated in the Netherlands. The point is, it is not an American company (it is technically considered a British multinational).
 
DA60 said:
Second, if Trump puts tariffs on German cars, then Germany will put tariffs on American cars. And then it will inevitably spread - as the EU puts pressure on their trading partners to put tariffs on US imports. And Trump will put more tariffs on those countries imports and on and on until you have a trade war...where everyone loses but the rich

Third, price for things will go up a lot, not a little.

Take a widget as an example. Say there are two widgets sold in America. One is made in China and sells for $10 and one is made in America and sells for $11.

Now when Trump puts a 35% tariff on the Chinese-made widget, it will then go up to $13.50 and no one buys it. So the American company has a monopoly and sells all they want and hires more Americans to built the greater demand. Of course, you have to pay 10% more for them then before, but that is worth the extra jobs...right?

Well, it won't be 10%...it will be FAR higher.

You see, the person that owns that American company has a monopoly. So why will he sell his product for $11, when he can sell it for $12.50? He still well undercuts the Chinese made one plus he gets the 'Buy American' sales as well.
Assuming people need this widget, they will have to pay the extra price. They pay 25% more, the company and it's owners/stockholders makes more money. Sure, there are a few more American jobs. But all the little guys/gals have to pay 1/4 more for these widgets while the rich make more money on the monopoly.

Do you want to pay 20-25% more on almost everything you buy just for a few extra U.S. jobs (when the current unemployment rate is already only 4.7%)?

I sure don't.
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There are a lot more car companies than two. German sales in the US auto market are like, what, 6%? 7%? They are hardly keeping the monopolistic forces at bay.
 
PeteEU said:
Cant sell US made cars in Europe due to different regulations.. same with European made cars cant be sold in the US.
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Then what are we talking about? There can't be any tariffs, right?

You're wrong.

No.. the WTO would make the decision after a complaint by the EU (and the rest of the world). That would mean that Trump would either have to stop the tax, or accept similar sanctions on US exports. Or of course just leave the WTO..
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It's funny that you think the WTO has that much power.

The non US car manufactures world wide dwarf that of the US. The US may be the second biggest market after China, but lets put it this way.. the world can live without US cars but the US can not live without the rest of the worlds cars.
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You think we wouldn't build more car factories here to support our own domestic demand? Hell, there is probably enough spare capacity in all of the existing factories to make up for the withdrawal of everything but Toyota, and they wouldn't close their own factories here!

Err no the EU does not. The EU makes more food than it can eat. Most US foods are banned into the EU because of all the crap you put in your food over there.
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...that's not how trade works, I'm afraid. Did you know that the US exports crude oil, even though it also imports it?

The EU imports a lot of food, not just for people but also for livestock. Their biggest ag-trade partner is Brazil, but the US is number 2.
 
PoS said:
Well it seems that our incoming POTUS has a 19th century view on things.
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...a characterization completely lost on him as he has never opened a history book. He probably thinks tariffs are a creative idea of his.
 
Gonzo Rodeo said:
FCA is headquartered in London, and incorporated in the Netherlands. The point is, it is not an American company (it is technically considered a British multinational).
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That is Fiat Chrysler.

Chrysler is wholly owned by Fiat - which is based in Turin, Italy.

Chrysler is owned by Italians - not the Brits.
 
DA60 said:
That is Fiat Chrysler.

Chrysler is wholly owned by Fiat - which is based in Turin, Italy.

Chrysler is owned by Italians - not the Brits.
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Did you take the point though? It's not an American car company anymore?
 
DA60 said:
Second, if Trump puts tariffs on German cars, then Germany will put tariffs on American cars.
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LOL...

Like they already don't do that?

Only the rich in Germany can afford to buy a new US car.

There aren't many over there. Losing US sales to Germany is nothing compared to the jobs it would bring here.
 
Lord of Planar said:
LOL...

Like they already don't do that?

Only the rich in Germany can afford to buy a new US car.

There aren't many over there. Losing US sales to Germany is nothing compared to the jobs it would bring here.
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Obviously, Germany would put a 35% tariff on whatever they thought would be equally as punishing to America as Trump's 35% tariff is to Germany.
And if that was not enough, Germany would go to it's trading partners and get them to put tariffs on American exports.

If you think Trump putting 35% tariffs on German imported cars would only hurt Germany - guess again.

Just look at Smoot Hawley and how that ballooned into a trade war...a similar thing would happen this time. Not maybe - guaranteed.

Germany depends on exports - they are not going to just shrug off Trump's idiotic tariff's.
 
DA60 said:
Obviously, Germany would put a 35% tariff on whatever they thought would be equally as punishing to America as Trump's 35% tariff is to Germany.
And if that was not enough, Germany would go to it's trading partners and get them to put tariffs on American exports.

If you think Trump putting 35% tariffs on German imported cars would only hurt Germany - guess again.

Just look at Smoot Hawley and how that ballooned into a trade war...a similar thing would happen this time. Not maybe - guaranteed.

Germany depends on exports - they are not going to just shrug off Trump's idiotic tariff's.
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I believe that under the European Union, you attack one, you attack them all.

We should really be patient with this....I suspect there is a lot of "alternative facts" involved here. We have seen where Trump took credit for "saving" 1,000 jobs at the Carrier plant when in reality that new was announced a year before; he had nothing to do with the decision.

We must wait until he actually acts, then we can sort out the "alternative facts:>
 
I continue to wait to hear examples of trade practices which are "unfair" to the US, rather than simply cases where non-US worker are able and willing to do the same jobs for lower wages (because the job opportunities and cost of living are different in their countries, as compared to the US).
 
DA60 said:
Obviously, Germany would put a 35% tariff on whatever they thought would be equally as punishing to America as Trump's 35% tariff is to Germany.
And if that was not enough, Germany would go to it's trading partners and get them to put tariffs on American exports.

If you think Trump putting 35% tariffs on German imported cars would only hurt Germany - guess again.

Just look at Smoot Hawley and how that ballooned into a trade war...a similar thing would happen this time. Not maybe - guaranteed.

Germany depends on exports - they are not going to just shrug off Trump's idiotic tariff's.
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My God.

They already tariff our cars by 35% or more.

I've been to Germany. Have you?

I'll bet less than 0.2% of the cars on the road are USA made.

Get educated on the topic please.

A $28k US car costs something like $42k over there. They are not going to buy a US car over a German car except as a status symbol.
 
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