Invited by the US administration, three German car bosses went to Washington — an unusual move. The upshot is that, if anything, there’s probably more understanding now for each other’s positions, say DW’s Henrik Böhme.
Things used to be different in the old days. When a carmaker wanted to open a new plant, local authorities would offer tax incentives, praise the location’s skilled workers, the weather on the ground and everything else.
That has changed. Three German car bosses were invited to Washington to be told by the US administration they should invest more in the US rather than in China, Turkey or elsewhere. And they were told that if they don’t play along, higher tariffs would be imposed on their imported cars.
The US’ auto industry trade deficit with Germany is said to amount to $30 billion (€26.5 billion), because a lot more German cars and car parts are exported to the US than the other way round. Maybe, this is because the likes of General Motors do not really produce the cars that German consumers dream of.
On the other hand, Volkswagen, Daimler and BMW aren’t among the top players on the US market either — they have a combined market share of only 8 percent there (Toyota alone accounts for 14 percent).
Nevertheless, US President Donald Trump is fed up with seeing so many Mercedes cars on 5th Avenue in New York. The question is: Why then is he encouraging German carmakers to produce more in the US?
Tricky games
It may not be too far-fetched to believe that the president and his economic advisers are employing this policy to discipline GM. The US market leader announced recently it would shut down six plants in North America (four of them in the US) and cut 15,000 jobs. Maybe Trump’s hidden message to GM is: if you don’t want it enough, foreign carmakers can pick up the slack.
The three German car bosses who went to Washington didn’t really have any new things to offer. BMW has long been mulling a new plant for engine production in the US. They just renewed their intention ahead of the meeting in the White House and earned some praise from the president on Twitter.
VW chief Herbert Diess for his part reiterated his company’s resolve to cooperate with Ford. And as Volkswagen is in the middle of an electrification campaign, it may just as well produce some electric cars in the US — that shouldn’t be much of a problem. Daimler, too, announced it would invest another $1 billion in the United States.
Higher tariffs or not?
“I’m a man of tariffs,” Trump said shortly ahead of his meeting with the German car bosses, although his remarks on Twitter may primarily have been directed at China. However, the carmakers themselves are not in a position to negotiate with Trump on tariffs — only the European Commission has a mandate to do so.
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