President-elect Donald Trump threatened German car makers with a big border tax of 35 percent for cars imported into the U.S.
Trump criticized German auto makers like BMW and Volkswagen for producing the majority of their vehicles in Germany, not the United States. “You can build cars for the United States, but for every car that comes to the USA, you will pay a 35 percent tax,” Trump told German newspaper Bild. If the German firms decide to build factories in Mexico and plan to sell cars to the U.S., “without a 35 percent tax, you can forget that,” Trump told reporters.
German automakers have substantial investments in Mexico. BMW announced a $2.2 billion plant in central Mexico that will open in 2019, where it would produce the BMW 3 Series. Another German car company, Volkswagen, opened a $1.3 billion facility in Mexico last year for its Audi division. Even Mercedes-Benz has plans to move part of its operations to Mexico by 2018.
The firms pointed out Monday that they also make cars in the United States. Over the past decade, German firms have quadrupled vehicle production in the U.S., and employ some 33,000 workers in the nation.
For their part, German car companies are not firms guilty of seeking cheap labor in Mexico. For decades, U.S. automakers outsourced jobs to Mexico because of its comparative advantage in cheap and abundant labor, but now, this trend is in overdrive.
Since the year 2000, the U.S. lost five million manufacturing jobs to Mexico, CNN reported in March, 2016. Fiat Chrysler said in July, 2016, that within a year the company will stop most all manufacturing in the U.S. and will possibly move its operations to Mexico, reports USA Today. (RELATED: More Companies Moving To Mexico, Finding Fewer Laborers To Fill Jobs)
Since defeating former Secretary of State Hillary Clinton, Trump has been on a tirade against automakers worldwide. Trump threatened General Motors Company earlier this month with a “big border tax” for moving production of its Chevy Cruze model to Mexico. Trump tweeted out at 7:30 a.m. Eastern time, Jan. 3 that, “General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A. or pay big border tax!”
Trump also took aim at other automakers, like Ford, for maintaining current large-scale production facilities in Mexico. In response, Ford bagged its plans for a new $1.6 billion factory in Mexico and instead, added 700 jobs to its Michigan plant. Ford’s CEO called the move “a vote of confidence,” in Trump and his pro-growth policies.
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