Masked villain

The real target of Trump's tariffs? German carmakers

BMW, German, Trump
Unwelcome wagon. Source: BMW

Donald Trump loves conflict. He sees the extremely dangerous trade conflict as the pinnacle of his presidency. But instead of seeking constructive solutions with his international partners, he’s doing everything he can to provoke them.

The US president has long been concerned with more than just commodity imports. The punitive tariffs on steel and aluminum are only part of his campaign against foreign competitors. Mr. Trump’s latest attack was against German premium cars. In a speech to cheering supporters at a campaign rally over the weekend, the president threatened to impose fines on Mercedes-Benz and BMW if the European Union choses to fight back with new trade barriers.

German car models are frequently seen on US highways, including on the outskirts of Pittsburgh, Pennsylvania where Mr. Trump held that rally. In consumers’ minds, the models represent German-made quality, and it’s thanks to that good reputation that the cars have become so common on American roads. Now Mr. Trump is exploiting the vehicles as an embodiment of the supposed enemies assaulting American pride.

The fact that the president is zeroing in on German automakers, along with Chinese steelmakers and Russian aluminum producers, exposes the true motive behind his radical trade policy. Officially, the import duties on steel and aluminum are intended to strengthen domestic producers for national security reasons – producers can independently supply the US military with metals in the event of a war.

But with this new policy, the US government is creating a dangerous precedent that could cause the fragile structure world trade is built upon to implode. Trump, in fact, has already revealed what his real purpose is: He wants to undercut even close allies, and in so doing, undermine decades of diplomatic, economic and military cooperation.

Cleary, there are no connections between imported BMWs and the number of US tanks built. And yet the notion of the evil German car is still an effective tool to fire up his base. The attack in Pittsburgh was no slip-up, nor can it be cast aside as akin to one of his nightly Twitter tirades. It was a purposeful, targeted dose of rage designed to appeal to his base of supporters.

Of the 1.3 million German cars sold in the US last year, more than 800,000 were produced on American soil.

If Trump makes good on his threat, it will constitute a serious blow to German car manufacturers. VW subsidiary Porsche, for example, sells almost a quarter of all cars in the US and would be confronted with higher prices and falling sales.

The step formally requires a further investigation by his commerce secretary, which takes time. But the furor Mr. Trump has unleashed is already sufficient to cause real damage. Shares of German car manufacturers fell immediately after Mr. Trump suggested last week that special customs duties could be imposed on European car imports.

Sure, Mr. Trump, with his scandal-plagued tenure and his inability to retain staff members and experts, may seem incompetent when it comes to the realities of daily governance. But he’s smart enough to know how powerful words can be. He demonstrated this back in 2016, when his vilifications of world trade, Latinos, Muslims and the media proved to do more to boost his candidacy than his qualifications.

Mr. Trump is using the attacks for domestic political purposes right now. In this important mid-term election year, he is doing everything he can to fire up his voter base. When he targeted German cars during the rally in Pennsylvania, for instance, he was campaigning for a Republican congressional candidate who may well lose to a Democrat, though the race is taking place in a Republican stronghold.

His use of foreign car manufacturers as scapegoats is not exactly farsighted. Of the 1.3 million German cars sold in the US last year, more than 800,000 were produced on American soil. Mercedes, BMW and Volkswagen operate large plants in Alabama, South Carolina and Tennessee, and have created thousands of American jobs. If the US government takes action against German cars, it will damage America too.

The latest escalation shows once again that the world cannot trust that negotiations will yield agreements with Mr. Trump. When Mr. Trump announced the punitive tariffs against steel and aluminum imports, he promised that there would be room for negotiation and stressed that America’s friends deserved “flexibility and cooperation.”

But with his shoddy attacks, the president is destroying opportunities frank negotiations. The climate of cooperation is further poisoned by the fact that he is having world leaders appear at his doorstep in order to beg for exemptions from customs duties. Every country has the right to adjust its trade policy, modify agreements and find ways to combat price dumping and overcapacity. The basis for doing so, however, should be fair competition and fair treatment of trading partners. But this president has no interest in fairness.

The author is a Handelsblatt correspondent in Washington. To reach the author: meiritz@handelsblatt.com

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