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Trump wants to ban German cars from America

EnlargeChris Kleponis  Pool via Bloomberg

An exclusive report from German magazine WirtschaftsWoche cites several unnamed us and European diplomats. A report from Germany's Wirtschaftswoche magazine cited several unnamed European and USA diplomats familiar with these alleged plans, according to Automotive News.

The Trump administration last week opened a trade investigation into vehicle imports, which could result in a 25 percent tariff on cars on the same "national security" grounds Washington used to impose metals duties in March.

"That German cars are a thorn in the side of US President Donald Trump has been known for some time", a Google translation of the WirtschaftsWoche article says. Before being elected, he reportedly owned several Mercedes, and photos have shown him driving a Rolls-Royce - a product of BMW. Although he is for free trade, but not at any price: "I love free trade, but it must be a smart trade, so I call him fair". In 2017, German automakers assembled 804,000 cars in USA plants, exporting another 657,000 to North America, according to the VDA industry association. "E.U. passenger-car imports from the United States were worth €6.2 billion (US$7.3 billion) a year ago, while the bloc's USA exports topped €37 billion (US$43.1 billion)", said the newswire.

There's also the fact that a number of German automakers already have huge manufacturing presences in the US.

The threats made to the vehicle sector are part of a bigger trade dispute with the United States. That could lead to tariffs of up to 25 percent on the same "national security" grounds used to impose USA steel and aluminum duties in March.

Trump's auto tariff is a test of Franco-German solidarity since French carmakers have hardly any US sales, while German carmakers generate up to 30 percent of global sales there. For example, Mercedes-Benz builds the latest G-Class at Magna-Steyr's plant in Austria and the forthcoming Audi E-Tron Quattro is a product of Belgium. Analysts at Evercore ISI said last week imposing tariffs would cause a burden of €4.5 billion for German premium manufacturers, destroying their business.