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

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Tedward Tedward on Jun 01, 2018

    Wow guys. The us, driven gleefully by both parties, has been selling our manufacturing capacity out at the behest of our own domestic financial industry. We've used access to our consumer market as the carrot to our poorer foreign partners as well as the income generator for our outsourced manufacturing investments. Blaming this on one politician or party is fantasy land wishful thinking and leads me to believe anyone doing so is shamefully open to political propaganda. Also, the Obama contempt is bizarre, you don't have to agree with his policies to respect their man, his accomplishments are truly staggering and his personal life seems to be conducted with dignity. One needs to show that the manufacturing shift is a) Not in our interests and b) realistically reversible before launching into some hot winded diatribe about reversing the "vichy liberal" policies, which are anything but. Also, DJT supporters should really think about whether all of this is really about the countries long term interests or just another short term political move designed to personally benefit him (not the Republican party even). His track record so far is pretty biased towards the self dealing side of things.

  • Inside Looking Out Inside Looking Out on Jun 01, 2018

    You guys missing the big picture. It is not about Community Organizer or Reality TV Star being elected president. The issue is that any system evolves nothing stays static. The thinking that world order established after WWII by US, NATO or Warsaw Pact will persist forever in the same shape and form is deeply mistaken. NATO served its purpose well and is not needed anymore - SU is gone long time ago and attempt to turn Russia into enemy of Mankind does not work. EU is in deep crisis and it is a matter of time when both NATO and EU unravel. It is already happening. EU had a chance to establish single European Army, common European identity and culture, overcome nationalism and etc to become more like United States of Europe than collection of independent states. We in US also tired of spending huge amount of our hard earned money trying to protect and placate unruly children which world's former superpowers had become. It could not last forever and it did not. We want our money back, our infrastructure is crumbling, social security and national healthcare is a sad joke compared with developed European countries. It is time to invest into our own country and our own people. Thats why we elected Trump. Other candidates would be afraid to say "NO" to Europe and other so called "allies" and disband outdated structures. It is not the first time attempt of globalization fails. First it were Romans, then Europeans, Germans even came up with their own version of globalisation based on master race. PAX Americana came to the end too. Some progress was made but not enough. Now evolution turns in the new direction, rise of new found nationalism is evident and will wipe out outdated structures. New fresh beginning is due. Interesting times are ahead of us. Who will lead the new attempt of globalization and when this will happen - nobody can say. US is broke - it will be not us. China?

  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
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