French President Convinced Trump Wants to Kill German Cars; Steel Tariffs Strike U.S. Allies

There’s been quite a bit of the old “he said, she said” as the global trade war between developed nations coalesces. Germany has not covered U.S. President Donald Trump’s trade policy favorably, not that it has much reason to. His new tariffs on imported steel and aluminum has tested relationships with numerous countries and, while it isn’t the biggest exporter of metal to the United States, Germany has something to lose. Likewise, proposed duties on passenger vehicles have sincerely rubbed Deutschland the wrong way.

However, the issue was further complicated this week after a gossipy report surfaced claiming Trump told French President Emmanuel Macron in April that he would continue hampering the European auto manufacturers until there are no Mercedes-Benz vehicles driving in America.

Reported initially by German outlet Wirtschaftswoche (Economic Week) and followed by Reuters, the article claims several unnamed European and U.S. diplomats verified the story. In fact, the quotes given were taken from an interview conducted moments after his inauguration in 2017.

“When you walk down Fifth Avenue, everybody has a Mercedes-Benz parked in front of his house,” Trump said in the earlier interview with Bild. “You were very unfair to the U.S.A. It isn’t mutual. How many Chevrolets do you see in Germany? Not many, maybe none, you don’t see anything at all over there. It’s a one-way street.”

Wirtschaftswoche noted that an import duty of 25 percent would depress German GDP by roughly 0.16 percent. “No country would fear higher absolute losses through such an inch than Germany,” said Gabriel Felbermayr, director of the Ifo Center for Foreign Trade.

The outlet also said Trump’s reasoning for the tariff proposals were ill-conceived, suggesting he might not realize that BMW and Mercedes-branded cars built in the U.S. are also subject to the European Union’s 10 percent import fee. Of course, the same reasoning would apply to cars imported by Ford and General Motors under U.S. tariffs.

Since Macron’s administration declined to comment on the report, whatever Trump told him is unverified. However, this hasn’t stopped the article from being cited by numerous outlets — many of which are far bigger than Wirtschaftswoche and neglected to mention the claims would have benefited from additional corroboration. The outlets’ coverage of the U.S. president has been overwhelmingly unfavorable in the past. But we’re not ready to call its claims “fake news,” either.

Depending on how the United States’ trade investigation into vehicle imports goes, these new tariffs could become a real thing, unsettling the auto industry quite a bit. But it won’t stop German cars from populating American roadways. Both Mercedes-Benz and BMW have factories in the country already. All in, German manufacturers build roughly 800,000 vehicles annually within the United States. However, according to the industry group Verband der Automobilindustrie, its members also exported 657,000 foreign-built vehicles into North America last year.

While Trump proposed ludicrously high auto tariffs during his campaign, the issue has only come up in earnest within the last few months. Germany has been critical of his proposals but seems weary to respond with trade penalties of its own. This could be part of Trump’s strategy. Many claim his wildly aggressive trade proposals simply exist so he can negotiate for what he really wants at a later date. No country wants to become involved in an economic war with the United States.

There are holes to poke in that theory, though. Both Mexico and Canada (which sends more steel into the U.S. than anyone) were expected to receive amnesty from Trump’s steel tariffs. The very threat of the fee was presumed to be a negotiatory tactic and both countries were given a break from the tax while talks progressed. But the United States Commerce Secretary, Wilbur Ross, said discussions to reduce America’s trade deficit did not go as planned. Now NAFTA members and the EU are subject to 25 percent duty on steel and 10 percent on aluminum.

The president of the European commission, Jean-Claude Juncker, vowed swift retaliation after the announcement. He intends to make a case with the World Trade Organization and fire back with more import fees on American goods. It’s all rather surprising, as Europe and the United States have been close allies for decades at this point.

[Image: Mercedes-Benz]