President-elect Donald Trump has warned that German carmakers will pay a border tax of 35 per cent on cars imported to the U.S. market.
Trump said that in an interview with a Geman newspaper a few days ago. His words drew sharp criticism from Berlin and hit the carmakers’ shares.
In the interview, Trump criticized German automakers such as BMW, Volkswagen and Daimler for building factories in Mexico and importing the cars to the U.S. market.
Shares in all three car makers have fallen after the interview. Those German automakers are heavily investing in their factories in Mexico as the production costs there are lower than in the US.
According to Trump, if BMW wants to build a factory in Mexico and import the vehicles to the US market, then the German automaker should pay a 35 per cent tax.
The BMW Group spokeswoman reminded that the carmaker’s largest factory was in South Carolina and they were “very much at home in the US” employing more than 70,000 people in the country. In addition, the BMW plant in San Luis Potosi would be much smaller and its production would be exported globally.
Peter Schwarzenbauer, who heads BMW’s Mini and Rolls-Royce brands, told reporters at a conference in Munich that Trump’s comments weren’t a surprise. The facility in Mexico would only be an addition to the existing BMW 3 Series factories in Germany and China, and would start production from 2019.
Although the German company sees “no reason” to change its plans in Mexico, other European carmakers took into account Trump’s comment and as a result Ford has canceled plans for a $1.6 billion plant in Mexico and decided to expand an existing facility in Michigan. Toyota, which is ready to start a new factory in Mexico in 2019, has said it would reconsider the new situation.