Punitive tariffs for EU cars
18.02.2019
W As the 'Frankfurter Allgemeine Zeitung' reports, the German auto industry has criticized the impending classification of European car imports as a threat to American national security. If the American Department of Commerce came to this assessment, it would be incomprehensible, announced the Association of the Automotive Industry (VDA) in Berlin. There is a threat of punitive tariffs of ten to 25 percent on car imports. Initially, however, there should be exceptions for European cars in order to force concessions from the EU.
Chancellor Angela Merkel warned the Americans in advance against further measures. The consequences for the European auto industry could be severe, depress sales, reduce corporate margins and presumably cost jobs. For many European premium car manufacturers, the USA is the most important single market next to China.
Car bosses had already negotiated
In the summer of 2018, the US ambassador Richard Grenell had a secret meeting at the American embassy in Berlin sought a solution with the bosses of VW, BMW and Daimler with Berlin and Brussels in the dispute over the car tariffs. The way out of the trade dispute could be a zero solution - that is, Europe and the USA completely foregoing car tariffs.
According to WTO rules, an agreement on this central issue would only be possible in conjunction with a broader industrial tariff agreement Europe and the USA possible. As the Handelsblatt reports, France is still standing opposite.
The US auto trade balance
In 2017, the USA imported a total of 8.3 million cars valued at 192 billion dollars ( the equivalent of 164 billion euros). 500,000 cars were imported from Germany alone. At the same time, the US exported around two million cars worth $ 57 million. Now US President Donald Trump wants to follow up his last big tweet on Wednesday (May 23, 2018) with action: “Big news is soon waiting for our great American automobile workers. After your jobs were lost abroad for decades, you've waited long enough! ”. According to the Süddeutsche Zeitung, he instructed the US Department of Commerce to investigate whether the car imports threatened US national security. 'Key industries like automobiles and auto parts are critical to our nation's strength,' he said. According to a report in the Wall Street Journal, the premium on cars, trucks and auto parts can be up to 25 percent.
For these three vehicles, the 25 percent premium would be as followsmean:
- Audi A6 (2.0l, 255 PS), current price: 49,700 dollars. + 25%=$ 62,125
- BMW 530i (2.0l, 251 PS) act. Price: $ 52,650, + 25%=$ 65,812
- Mercedes E 300 (2.0l, 244 PS), current. Price: $ 52,950, + 25%=$ 66,187
The big question, of course, is how Donald Trump wants to justify these punitive tariffs. The answer is not unknown: he directed his Secretary of Commerce, Wilbur Ross, to conduct a so-called Chapter 232 examination. This examination examines whether national security could be endangered in any way by the car imports. This exam looks familiar for a reason. Because on exactly this justification he justified the import tariffs on steel and aluminum of 25 percent and ten percent.
BMW: Net exporter of cars from the USA
Trump put down a few months ago BMW suggests building the plant in Mexico, where the 3 Series will be manufactured from 2019, in the USA. “It will be much better for them and for our efforts.” If BMW wants to sell from Mexico to other countries, that's fine. 'But if you want to build a factory in Mexico and sell cars to the USA without a 35 percent tax, then you can forget about it.' The 3-series plant in Mexico, which will start production in 2019, has a planned maximum capacity of 150,000 units and produced for the world market. The plant in San Luis Potosi replaces the production in Rosslyn, South Africa. The X3 will be built there in the future.
BMW is calm about the Trump announcement and counters with arguments: The brand builds more cars in the US than it sells there. The plant in Spartanburg is the largest in the BMW Group; 411,171 X models rolled off the production lines here in 2016. In the same year, the BMW Group sold 365,000 cars in the United States. BMW also cites the US Department of Commerce, which put exports from the Spartanburg plant in 2015 at ten billion dollars. This makes BMW the largest car exporter in the USA. From 2017, BMW will build the X7 in Spartanburg and increase the capacity of the plant to 450,000 units.
Germany is a great country, said Trump in the interview, a manufacturer country. But he added: “The fact is that you have been very unfair to the US. There is no reciprocity. ”
Trump: It's a one-way street
Trump said everyone on 5th Avenue in New York has a Mercedes at their door. 'Well, you are very good at exporting: We buy a lot of your cars,' said Trump in an interview with 'Bild'. But: “How many Chevrolets do you see in Germany? Not too many, maybe none at all, you can't see anything over there, it's a one-way street. ”What he apparently ignores: Ford has sold 283,445 cars and vans in Germany. General Motors was present in Europe with Opel. The brand sold almost 244,000 vehicles in Germany in 2016. BothBrands have been producing in Germany for decades.
USA and the WTO
However, the implementation of punitive tariffs will not be as easy as it works in Trump's populist world of thought. The USA, like 164 other countries in the world, is a member of the World Trade Organization (WTO). As a founding member from 1995, the USA are bound by the founding treaty, which, among other things, fixed contractual tariffs. These customs barriers cannot be changed unilaterally. While the EU - also a founding member - has stipulated a maximum tariff of ten percent, the maximum tariff in the USA is 2.5 percent and in Mexico 30 percent.
Should the USA sign the WTO treaty break, individual World Trade Organization members could sue the United States. This two-stage procedure initially provides for consultations with the countries concerned and then a year of arbitration. The US could appeal the judgment. In total, the procedure with objection takes two years. The arbitration tribunal and appeal court are exclusively made up of arbitrators who do not come from the countries concerned.
However, after a judgment the WTO cannot enforce the revision of the illegal tariffs. Only the WTO could allow its member states to levy punitive tariffs as well. However, this would severely restrict free trade. A withdrawal of the USA from the WTO is also conceivable, but the consequences for the country cannot be calculated. All foreign products would become more expensive, technological development would be hampered and domestic goods could deteriorate because of the lack of competition in terms of quality.
Autoland Mexico: facts and figures
- 19 large car plants are producing for America and the world market
- 3 plants are currently under construction or planned: BMW, Daimler, Kia want to produce in Mexico
- 25.9 billion US dollars have been invested by car manufacturers in Mexico since 2010
- 90 billion US dollars is the value of the cars exported from Mexico to the USA
- 280 production facilities are maintained by auto suppliers such as TRW, Magna, Bosch or Denso in Mexico
- 50 percent of the vehicles and vehicle parts are exported
- 90 percent of the vehicles and vehicle parts exported go to the USA
- In 1921, Buick starts producing cars in Mexico
- In 1925, Ford begins car production in Mexico
Which automaker You can see which models are produced in Mexico in the picture gallery.
Autoland USA: facts and figures
- In 1982, Honda became the first foreign car manufacturer to build a plant The US
- Foreign automakers have invested US $ 52 billion in the US since 2009
- Chrysler, Ford and General Motors have invested US $ 30 billion in the US since 2009
- 12 million cars and lightTrucks were built in the US in 2015
- 17.4 million cars and light trucks were sold in the US in 2015
- 909,700 people work in the US auto plants
