German carmaker BMW told US President Donald Trump's trade minister that border taxes on autos would cost investment and jobs in America, in a letter seen by AFP today. Far-reaching effects from tariffs already in place and new ones mulled by the White House could mean "strongly reduced export volumes and negative effects on investment and employment in the United States," the firm warned. Commerce Secretary Wilbur Ross is investigating whether 20-per cent tariffs European-made cars could be justified for national security reasons, in a so-called "Section 232" probe."The answer to that question is an unqualified no," BMW said, arguing closer trade relations make countries less likely to fight and increase national security.
It added that US openness to trade motivated the company to open a 10,000-job factory in Spartanburg, South Carolina, saying the plant adds US$6.3 billion annually to the state's economy.
The group also noted that the overall value it adds to the US economy is worth US$15.77 billion, with direct and indirect employment of 120,855 people.BMW is a net exporter of vehicles from the US, arguing that means it is already helping reduce the American trade deficit Trump is anxious to cut down.
But the Munich-based firm and competitor Mercedes-Benz with its Alabama factory are already suffering in Trump's trade war on two fronts with China and the European Union.They face "a considerable cost burden on our exports to China", BMW said, after Beijing hit US car exports with tariffs in response to American border taxes.
Profitability at US car plants could worsen further if parts imported to America from Europe also face tariffs.Despite the pushback against new tariffs, BMW said it agrees with Trump's stated aim to get the EU to lower its own car import taxes.
"Removing both US and EU automotive duties entirely is in the best interest of German auto manufacturers, as it would save them an estimated one billion Euros (US$1.16 billion) per year," the firm said.
A further escalation in the tit-for-tat tariff war between long-time allies the US and EU appeared more likely this weekend as Trump declared Europe "possibly as bad as China" on trade.
"They send a Mercedes in, we can't send our cars in," he complained to broadcaster Fox News Sunday.
The EU has retaliated to US tariffs on steel and aluminium imports with duties on items like jeans and Harley Davidson motorbikes.