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Trump Turns Ire Towards German Automakers With 35 Percent Tariff

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【Summary】After threatening American automakers Ford and General Motors with a 35-percent tariff for moving production to Mexico, U.S. President-elect Donald Trump turned his sights towards German cars that aren’t produced in the U.S.

Original Vineeth Joel Patel    Jan 20, 2017 10:35 AM PT
Trump Turns Ire Towards German Automakers With 35 Percent Tariff

U.S. President-elect Donald Trump has openly claimed that he wants to bring automotive jobs back to the United States by imposing a 35-percent tax on vehicles that are imported from Mexico. The massive tariff was originally aimed at American automakers. Ford, for instance had plans to shift production of its small cars from Michigan to Mexico. General Motors also came under Trump's sights for the Chevrolet Cruze hatchback, which is predominantly aimed at international markets and is built in Mexico, as well.  

After threatening to impose a 35-percent tax on American vehicles, Ford stated that it wouldn't change its plans to move the production of the Ford Focus to a $1.6 billion plant that is being built in Mexico.  However, earlier this month, Ford announced that it would still move production of the Focus to Mexico, but stated that it was canceling plans related to its $1.6 billion factory. 

Trump Eyes German Companies

After the ongoing battle with American automakers, Trump has stated that he would enact a 35-percent "border tax" on German and Canadian automobile imports, reports NBC News.  

According to a report by Reuters, Trump, in an interview with German newspaper Bild, called out BMW, Volkswagen, and Daimler for failing to manufacture vehicles in the U.S. 

"If you want to build cars in the world, then I wish you all the best. You can build cars for the United States, but for every car that comes to the USA, you will pay 35 percent tax," stated Trump in remarks that were translated from German. 

The U.S. President-elect, as pointed out by NBC News, specifically called out BMW for the automaker's plans to build a plant in Mexico with the intention of manufacturing cars for the U.S. market. But BMW, which is hard at work on building an autonomous facility in Munich, isn't the only German automaker with plans to build cars in Mexico and then import them up north to the U.S. 

Other Automakers In Mexico

Audi, for instance, opened a plant in Mexico last year where it builds the redesigned Q5 SUV. The plant, as reported by NBC News, is the sole global source for the SUV. Mercedes-Benz is planning a joint venture with Infiniti that would see the company share Infiniti's plant in the Mexican city of Aguascalientes. 

Mexico, as NBC News points out, has become one of the go-to locations for automakers to manufacture their cars for a number of reasons. One of which includes low labor costs. 

Since coming out against German automakers for having factories in Mexico, BMW responded by stating that its largest factory is located in South Carolina and that vehicles made in a smaller factory in Mexico will be exported globally, reports Bloomberg

"We take the comments seriously, but it remains to be seen if and how the announcements will be implemented by the U.S. administration," stated Matthias Wissmann, president of German auto industry association VDA, in an email. 

As of right now, BMW has no intention to change its manufacturing plans in Mexico.

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