Auto Tariffs

The Trump-sized risk that won't go away

ONLY USE ONCE – Handelsblatt Autogipfel 2017 Dieter Zetsche Gabor Steingart Mercedes Daimler CEO Handelsblatt publisher
Daimler CEO Dieter Zetsche (here with Handelsblatt publisher Gabor Steingart) worries about Trump trade restrictions on car imports. Source: Marc-Steffen Unger for Handelsblatt

The steady drumbeat of protectionist rhetoric flowing out of Washington is leading German automakers to voice increasing concerns that their car exports to the lucrative American market could be hampered by tariffs or other Trump administration efforts to restrict trade.

Appearing at an “auto summit” conference organized by Handelsblatt, Matthias Müller, the chief executive of Volkswagen Group, was asked if he thought that the question of US tariffs had been resolved. “Unfortunately, the topic is still on the table,” Mr. Müller said, “There are three different versions, which would each be difficult for us in different ways. We cannot just simply move our factory.”

He appeared to be referring to Volkswagen’s existing vehicle assembly plants in Mexico, including a facility in Puebla that is the company’s largest factory outside Germany. VW subsidiary Audi also opened a €1.6 billion ($1.9 billion) plant to assemble SUVs in Mexico last year.

Similar concerns were voiced at the Handelsblatt conference by Dieter Zetsche, CEO of Daimler, the parent of Mercedes, who urged Germany to make its conviction clear that “free trade is the only way forward.” He said trade restrictions harm everyone, most of all the countries that initiate protectionism. Mercedes is making SUVs at a factory in Mexico.

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