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German Carmakers Are In Great Danger Because Of Donald Trump
The import tariffs that Donald Trump may impose during his presidency will affect more than just Chinese manufacturers. Experts warn that German carmakers could also lose more than 10 percent of their current operating profit.
Although Trump has not yet taken office, let alone introduced tariffs, he has seriously announced that he will do so, and foreign car manufacturers must take these threats very seriously.
German brands alone export 583,000 cars from Europe to the US and an additional 343,000 from Mexico each year. And since many of those nearly one million vehicles have high prices, a sharp increase in customs duty from the current 2.5 percent to around 12.5 percent could prove a dangerous blow. One analyst from the investment bank Stifel Europe suggested that German car manufacturers could suffer a drop in profits between 11 and 15 percent because of everything, reports the German financial magazine Handelsbaltt.
BMW remains positive about the future of its US sales operations, and for good reason: like Mercedes and VW, it has the advantage of having its own US factories. While all three automakers still export thousands of cars to the US, they could cut back and instead increase the number of vehicles they make in the US.
But forecasts for other brands are less rosy. Every Porsche sold in the US is exported from Europe, and Audi’s best-selling model in America is the Mexican Q5, which accounts for a third of sales. Trump “has a crush” on Mexico and even proposed applying a 200 percent tariff on cars coming from Mexico to the US. BMW and VW also make cars in Mexico, as do Toyota, GM and Ford, but unlike those brands, Audi and Porsche do not have a factory in the US.
As Handelsblatt notes, this uncertainty in the US could not have come at a worse time. For years, the USA and China were the biggest export markets for German vehicles, and now, along with the decline in their sales in China, another heavy blow could arrive.
