D he is American president Donald Trump can not decide. First he sets the import duties for steel and aluminum on ice, just to announce tariffs on imported cars shortly thereafter , The share prices of German automakers are on the stock market, industrial and commercial agents groan, even speak of an “economic disaster”. But is the situation really that bad?
Donald Trump has his Minister of Economic Affairs Wilbur Ross mandated to initiate a formal customs procedure to limit auto imports and reduce America’s trade deficit with foreign countries. Imports have eroded the domestic auto industry, Ross said in Washington. Key industries such as cars and car parts are “crucial to our strength as a nation.” As with the tariffs on steel and aluminum, Trump uses a regulation passed in 1962 in order to be able to pass customs at the congress. This provision allows the President to impose import tariffs on the protection of domestic industry when he sees national competition threatened by foreign competition – a Cold War protectionist weapon. However, there are already import duties of 2.5 percent on foreign cars.
Cars a threat to national security?
In any case, companies have enough time to prepare. The Association of the German Automobile Industry (VDA) says it has been expected since Trump’s choice with such a method. And if that duties It will not be ready until a few months from now. The US Department of Commerce now has 220 days to check whether imported cars actually pose a threat to national security. Of course, the outcome of this process seems clear, as Minister of Economics Ross has already pointed out that he sees the responsibility for the weakness of the American auto industry, especially among the Japanese and German competitors. Anyone who wants can also see a threat to national security from this point on. If the formal procedure comes to this conclusion, President Trump will have 90 days to bring tariffs into force.
The automakers would be affected by customs duties, which could end up 25 percent, in different degrees. BMW, Daimler and Volkswagen operate their own factories in America as well as the Japanese competitors Nissan and Toyota. For example, BMW has an import quota of 66 percent in America. Harder it would hit the VW subsidiary Audi. The Ingolstadt have no own factory in America. The import quota of Audi is thus at 100 percent, the import duties would come fully to fruition. By the way, the tariffs would also affect some American manufacturers: Ford and General Motors sold more cars in America last year than they produced there. That is, they also import cars from factories overseas to the United States.
But what would the promised tariffs mean for sales of foreign automakers in America? That depends on several variables, apart from the different import quotas. Firstly, it is unclear how far the manufacturers will try to pass on the tariffs to their customers, so if they increase the prices by 25 percent or open only a part of them. For another, just produce BMW and Daimler especially expensive cars for the so-called premium segment. Their customers are traditionally not overly sensitive and tend to pay more for their car. It remains to be seen whether it will actually be possible to see a significant drop in sales.
China increasingly important for car companies
However, the most reassuring argument for German manufacturers in the debate is that the US market has lost importance for them for years anyway. 500,000 cars were exported to America last year by German companies. That is a minus of one quarter compared to 2013.