German Deputy Chancellor Sigmar Gabriel responded to remarks President-elect Donald Trump made in interviews with Germany’s Bild newspaper and the The Times of London. Trump warned that BMW autos manufactured in Mexico could face a 35% tariff, while he also noted the lack of reciprocity on the part of Germany as to buying American-made cars. When Gabriel, who also serves as minister of the economy, was asked what Trump should do to induce more purchases of American cars in Germany, he said: “Build better cars.”
Following Trump’s interviews in the two prestigious newspapers, Gabriel said that imposing a tax on imports would lead to a “bad awakening” for American car manufacturers because of their reliance on cross-ocean supply chains. Gabriel, who leads the Social Democratic party, said, “I believe BMW’s biggest factory is already in the US, in Spartanburg [South Carolina].” In a video interview, Gabriel said, “The US car industry would have a bad awakening if all the supply parts that aren’t being built in the US were to suddenly come with a 35% tariff. I believe it would make the U.S. car industry weaker, worse and above all more expensive. I would wait and see what the Congress has to say about that, which is mostly full of people who want the opposite of Trump.”
Today, shares in BMW, Daimler, and Volkswagen fell. BMW shares dropped 0.85%, Daimler’s were 1.54% lower, while Volkswagen shares were trading 1.07% down this morning in Frankfurt. All three of these car manufacturers are heavily invested in Mexico, where labor and other production are lower than the U.S. They seek to export smaller vehicles to the U.S.
Responding to Trump’s comments that Merkel had made an “utterly catastrophic mistake by letting all these illegals into the country”, Gabriel said the increase in the number of people fleeing the Middle East was the result of U.S. policy in the Middle East. “There is a link between America’s flawed interventionist policy, especially the Iraq war, and the refugee crisis, that’s why my advice would be that we shouldn’t tell each other what we have done right or wrong, but that we look into establishing peace in that region and do everything to make sure people can find a home there again,” Gabriel said.
“In that area Germany and Europe are already making enormous achievements – and that’s why I also thought it wasn’t right to talk about defence spending, where Mr. Trump says we are spending too little to finance NATO. We are making gigantic financial contributions to refugee shelters in the region, and these are also the results of US interventionist policy.”
German Chancellor Angela Merkel, who will stand for reelection this year, responded to Trump’s remarks about NATO and the European Union: “We Europeans have our fate in our own hands.” Trump said in his interviews that he is indifferent as to the fate of the European Union, saying that the organization exists largely to the benefit of Germany. He also said that he will negotiate a “deal” with the United Kingdom, while he applauded the British referendum that has begun that country’s departure from the EU. Merkel said during a press conference with New Zealand’s Prime Minister Bill English, said of Trump, “He has presented his positions once more. They have been known for a while. My positions are also known.”
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