The following article by Matthew Nussbaum was posted on the Politico website March 11, 2018:
The attacks, meant to stir up populist enthusiasm, could backfire if they instead spur fears that jobs in Trump country might be in jeopardy
President Donald Trump, expressing his ire over trade imbalances this weekend, made a peculiar choice: He focused his criticism on two European brands, BMW and Mercedes-Benz, that have significant investments in two of the nation’s most Trump-friendly states.
“Open up the barriers and get rid of your tariffs,” Trump said of the European Union’s trade policies in a wide-ranging and rollicking address in Pennsylvania Saturday. “And if you don’t do that, we’re going to tax Mercedes-Benz, we’re going to tax BMW.”
Trump made no mention of the German brands’ significance to two states that formed part of the bedrock of his support in 2016. BMW has an assembly plant employing more than 9,000 people in Spartanburg, South Carolina; about a third of the BMWs sold in the U.S. in 2017 were produced in the country, the company said. A Mercedes-Benz factory employs 3,500 people near Tuscaloosa, Alabama, according to data from the Alliance of Automobile Manufacturers.
The president’s plan to impose tariffs of 25 percent on steel imports and 10 percent on aluminum imports prompted consternation from lawmakers and business leaders concerned that major employers in those states might cut back in the face of higher costs. Trump’s latest attacks, meant to stir up populist enthusiasm, could backfire politically if they instead spur fears that jobs in Trump country might be in jeopardy.
Dan Ikenson, director of the trade policy center at the libertarian Cato Institute in Washington, said Trump likely hopes tariffs on European car imports would spur the German companies to make more vehicles in the U.S. But he said the unpredictability of Trump’s trade policies would more likely have the opposite effect.
“A countervailing factor would be a reluctance of the Germans to ‘reward’ this behavior, especially if it’s unclear where trade policy is going,” Ikenson told POLITICO. “His unorthodox and sometimes erratic behavior ultimately discourages investment in the United States.”
A White House spokesman did not respond to a request for comment Sunday. Trump has long said he believes it is unfair that the U.S. imposes a 2.5 percent tariff on European cars, while Europe has a 10 percent tariff for cars built in the U.S.
He warned of possible new tariffs last week on Twitter after the European Union said it might take steps in response to new steel and aluminum tariffs. “They make it impossible for our cars (and more) to sell there,” Trump wrote. “Big trade imbalance!”
Even before the president named the company Saturday, BMW was warning that targeting European cars would come back to bite the U.S.
“Should we get tariff walls, it would have an impact on jobs in the United States,” BMW CEO Harald Krueger said last week, according to Reuters.
Trump won South Carolina in 2016 with nearly 55 percent of the vote, and he racked up more than 60 percent of the vote in Alabama.
But recent events showed he might not be invincible there. The candidate Trump endorsed in the Alabama Senate primary last year, Republican Luther Strange, lost. After Trump switched his backing to Republican nominee Roy Moore, he lost too, a shocking upset that made Doug Jones Alabama’s first Democratic senator in 25 years.
Daimler, the parent company of Mercedes-Benz, has a total of 23,500 employees in the U.S., according to data the company provided to POLITICO. Of 280,000 vehicles produced in Alabama last year, about 70 percent were exported, the company said. BMW also exports more than 70 percent of what it produces in South Carolina, the company told POLITICO, with China and Germany as the top two destinations.
Exports of cars made in the U.S. could be hit if America’s trading partners responded to new taxes from Trump with their own restrictions.
A Daimler spokesperson declined to comment on Trump’s Saturday remarks. BMW also did not comment Sunday.
Sen. Lindsey Graham (R-S.C.), an on-again-off-again critic of the president’s policies, told CBS News last week — after Trump threatened to tax European car imports without naming companies — that Trump should leave BMW alone.
“China wins when we fight with Europe,” Graham said. “China wins when the American consumer has higher prices because of tariffs that don’t affect Chinese behavior.” Asked about Trump’s Saturday remarks, a spokesman for Graham did not comment directly but pointed to the CBS News interview.
Trade experts said targeting imported cars with tariffs without going through a process like the White House followed with steel and aluminum would certainly cause international pushback.
“It is not clear how long such a tariff would stand unchallenged,” said Kristin Dziczek of the Center for Automotive Research.